Authorities in Singapore recently detained three individuals accused of deliberately misrepresenting the final destination of U.S.-manufactured servers. These servers are suspected to contain Nvidia's highly coveted chips, raising significant concerns about the company's export practices. The detentions have cast a spotlight on Singapore's role in Nvidia's operations, as the country accounted for 18% of Nvidia's $24 billion revenue in the fiscal year ending January 28, based on customer billing location. Yet, the actual shipment of products to Singapore represented less than 2% of this figure, approximately $473 million.
Speculation abounds that Nvidia's artificial intelligence chips are being funneled to China, a nation that has seen its AI capabilities soar with companies like DeepSeek gaining international acclaim for their sophisticated and cost-effective models. The emergence of Singapore as Nvidia's second-largest revenue source in 2024 sounded alarm bells among industry analysts and investors. Mizuho analysts have warned that a comprehensive ban on Nvidia chip exports to China could result in a revenue hit of $4 billion to $5 billion for Nvidia this fiscal year.
Despite these concerns, Nvidia has declined to comment on the ongoing developments. Instead, it emphasized a critical distinction in its annual report filed last week regarding what constitutes a customer. The company stated:
"Customers use Singapore to centralize invoicing while our products are almost always shipped elsewhere." – Nvidia
Nvidia's shares plummeted nearly 8% on Monday, contributing to a 14% decline in 2025 that has decreased the company's market capitalization below $3 trillion. Similarly, Super Micro's shares fell by 11%, and Dell's stock dropped by approximately 6%.
In response to allegations of serving as a conduit for technology transfers to China, Singapore has firmly rejected such claims. Nevertheless, DeepSeek continues to train its AI on Nvidia's graphics processing units despite export restrictions intended to prevent such technology from reaching China.
The geopolitical landscape is increasingly characterized by hardened digital borders between East and West. This environment may prompt silicon smugglers to seek new avenues for circumventing these restrictions. As such, Nvidia highlighted in its report that its product shipments have:
"remained well below levels seen on the onset of export controls." – Nvidia