Μake us preferred on Google SENAWANG, Malaysia—An hour outside of the Malaysian capital, Bangladeshi workers this past week were driving dump trucks and excavators at a site stretching across 117 football fields.
It was a world away from the Silicon Valley boardroom where, hours later, Nvidia Chief Executive Jensen Huang would be ousted. Yet this site in Southeast Asia and others like it are at the heart of the Huang affair.
Here, a Chinese company plans to use Nvidia’s advanced artificial-intelligence chips. Thanks to Chinese customers, data-center industry leaders say Malaysia could become the second-largest data center hub in the world , after Virginia, packed with top-of-the-line Nvidia chips China’s leading AI companies can use to challenge American dominance.
Huang built a multibillion-dollar business to feed the ravenous appetite of Chinese customers for American chips, cultivating a network of Asian partners who could serve the Chinese far from Washington. He made a friend of President Trump and lobbied Washington hard to keep the backdoor to China open.
China jumped to take advantage of the avenues Trump didn’t close. Its AI developers exploited the Nvidia chips they desperately needed to catch up with America’s leaders, either using smuggled chips or accessing them remotely in places like Malaysia.
Revelations about Huang’s affair with an executive at one of those Asian partners—a possible Chinese intelligence asset—didn’t just blow up his career. They now threaten to implode the entire lucrative ecosystem he built in Asia to get China the chips it needed.
Nvidia reported $12.4 billion in China revenue in the six months through July 26 of this year, or 7% of its global revenue, and analysts say that countless more billions of dollars ultimately trace back to Chinese customers. By the estimate of Culper Research, the short-selling firm that flagged Nvidia’s China issue in May , more than 20% of Nvidia’s revenues last fiscal year were driven by China.
Jensen Huang speaks to President Trump in September, as House Speaker Mike Johnson looks on. Kevin Lamarque/Reuters
In Southeast Asia, “Chinese demand is responsible for the massive scale of data centers,” said James Chai, a researcher at Iseas-Yusof Ishak Institute in Singapore.
Huang’s downfall has set off a groundswell in Congress to halt the workarounds that allowed him to get Chinese business. Commerce Secretary Howard Lutnick has come under fire because he was seen as close to Huang and advocated a light touch on chip exports—a position that is now losing support within the Trump administration as the Commerce Department looks at tougher rules to curb China’s access to Nvidia chips.
The White House said this past week Trump “maintains complete confidence” in Lutnick. A Commerce official said that Lutnick and Huang don’t have any kind of special relationship beyond the commerce secretary wanting a good rapport with one of the most important U.S. companies.
Records seen by The Wall Street Journal show Megaspeed—the company of the former Nvidia CEO’s onetime mistress, Alice Huang—arranged to send nearly $12 billion worth of top-of-the-line Nvidia chips to companies in China between March 2024 and June 2025. Nvidia says it works to prevent smuggling. Megaspeed says it takes compliance seriously and is committed to following U.S. law. It also said this past week that it retained a U.S. law firm to lead a census of its graphics processing units.
The shipment records show orders for several hundred thousand chips, the very ones that the U.S. wanted most to keep out of Chinese hands through export controls, though the records don’t show how much of the hardware was actually delivered or where it originated.
A screengrab from CTI video footage obtained November 9, 2026 shows a woman identified by Reuters as Alice Huang after comparison with a photograph obtained separately, attending a dinner with Nvidia CEO Jensen Huang at a restaurant in Taipei, Taiwan May 22, 2025. CTI via REUTERS
Huang was unapologetic in pushing to sell as many chips to Chinese clients as possible even as his American customers were racing to stay ahead of Chinese rivals. The CEO’s effort to persuade Trump to allow direct exports of Nvidia’s high-end chips to China was mostly unsuccessful, despite policy flip-flops and headlines on the subject. But the workarounds, including remote access to overseas data centers, made up much of the gap.
Huang’s logic: Better to keep customers hooked on American tech and keep high-paying jobs at home than give an opening to rival Chinese chip makers such as Huawei Technologies.
“America cannot win the AI race unless America’s AI infrastructure wins worldwide,” an Nvidia representative said. Ceding the market for chips to Nvidia’s foreign rivals would hurt other American companies in the AI business, he said.
‘Deny them’
Until 2022, generative AI was mostly a research project and Nvidia chips were mainly designed for videogames. Late in 2022, two developments set the conditions for everything that has followed: The U.S. started barring the export of advanced chips such as Nvidia’s to China, and OpenAI released ChatGPT, setting off a scramble in China to leverage its formidable AI talent pool to catch up.
Gina Raimondo, commerce secretary under President Joe Biden, opposed the export of top-of-the-line chips to China. (REUTERS/Elizabeth Frantz/File Photo)
Then-Commerce Secretary Gina Raimondo crystallized the U.S. policy in December 2023: “We cannot let China get these chips, period,” she said. “We are going to deny them our most cutting-edge technology.”
Chinese companies quickly figured out the best two routes—smuggling and remote access—to sidestep that policy. By physically bringing Nvidia chips into China, Chinese AI developers keep their computing power nearby, making it easier to test, train and fine-tune powerful AI models, engineers say.
While Megaspeed’s Alice Huang was carrying on an affair with Jensen Huang , her firm sent chips to buyers in China that had years of business ties with local tech companies, the Journal has reported.
A case in March gives a glimpse of smuggling tactics. The U.S. alleges that a co-founder of Super Micro Computer, a longtime Nvidia partner, and others participated in a conspiracy to ship servers to a Southeast Asian company, then onward to China.
When inspectors from Super Micro asked to pay a visit to the Southeast Asian company’s facilities to ensure the servers it ordered were in its possession, the alleged conspirators had a problem, according to a federal indictment: The servers had already been sent to China.
To pass their audits, the conspirators allegedly arranged to build a Potemkin server warehouse that supposedly contained Nvidia chips. To fool a visiting U.S. government inspector, a hair dryer was used to remove and affix serial number stickers, according to the indictment, unsealed in March in New York federal court.
The Super Micro co-founder, Yih-Shyan “Wally” Liaw, has pleaded not guilty, with a trial set for next year. The company, which wasn’t charged, said it was a victim in the case and severed its ties to the defendants.
Such prosecutions likely touch only a small fraction of smugglers, according to people in the industry. Still, with the legal risks growing, many Chinese companies are spending billions of dollars on a legal alternative.
Data centers outside China can freely import Nvidia chips and rent the computing power to Chinese customers. In May 2025, the Trump administration opened the floodgates to the tactic by revoking a Biden administration plan to limit how many chips countries in Southeast Asia and elsewhere could import. The administration said it would put in place alternative curbs—but 18 months later, it has yet to do so.
To build the most advanced AI models and chase the U.S., Chinese developers say they still need Nvidia’s top-of-the-line chips. When using the chips in overseas data centers, they sometimes carry physical hard drives with the training data back to China from Southeast Asia. The data centers can also serve customers outside of China who use Chinese-developed AI.
Alice Huang and her associates leveraged their connections with Jensen to get named as an Nvidia cloud partner, according to people familiar with the matter.
The Nvidia partnership program was in effect a list of Jensen favorites who got preferred access to scarce AI chips—often by proving they had a big customer lying in wait to use the computing power, say people in the industry. In the case of Megaspeed, that customer was Alibaba, they said.
Attempts to reach Alice Huang were unsuccessful.
Insatiable demand
Data center companies in Southeast Asia found that once they landed Nvidia chips, Chinese demand was insatiable.
Aolani Cloud, a Singapore cloud-computing provider, courted investors last year by saying the geopolitical situation provided a unique opportunity for companies that could connect Chinese customers with advanced chips. Aolani, a Nvidia partner, explained in an investor presentation viewed by the Journal that top Chinese internet companies had to rent the chips they were blocked from buying.
The pitch worked. Aolani’s investors helped it fund some $2.5 billion in hardware in Malaysia by the beginning of this year. Its anchor customer: ByteDance , the computing power-hungry TikTok parent that hopes its AI models will catch up to OpenAI and Anthropic within several years.
Aolani says it has systems in place to strictly adhere to U.S. regulations, and from the start has been focused on building a global customer base.
Chai, the Singapore-based researcher, said in a recent report that Malaysia has attracted more than $34 billion in data-center investments, mostly from U.S. and Chinese firms. The country of 35 million people enjoys relative proximity to China, friendly relations with Beijing and a government that makes building and operating data centers easy, he said. About a quarter of Malaysians are ethnic Chinese who often speak Mandarin.
Workers operating heavy equipment at the site of a data center under construction in Senawang, Malaysia. Stu Woo/WSJ
DayOne, a Singapore-headquartered company spun off from a Chinese developer and operator of data centers, is building data centers able to house Nvidia chips across Malaysia and Indonesia. A single technology company accounts for nearly 70% of DayOne’s business, according to a recent DayOne filing, and people familiar with the matter said that customer was China-based ByteDance.
The blanketing of Malaysia with data farms to feed China continues at Senawang, an hour’s drive from the capital of Kuala Lumpur. Amid palm-oil plantations, trucks this past week rumbled in and out of a data center under construction by Vena Group, which is backed by American asset manager BlackRock.
Around midday, workers crossed the highway to the rows of shops and restaurants, where they could buy a curry lunch for about $1.30. A grocery-store owner estimated that 80% of the workers hail from Bangladesh and the rest from Indonesia.
Like many data-center businesses, Vena Group will construct the facilities and lease space to tech companies that install their own hardware. One company planning to use Nvidia-powered servers inside, say people familiar with the matter, is Chinese tech giant Alibaba.
The crackdown
The Jensen Huang scandal could destroy the basis for these enormous investments.
As smuggling cases proliferated and remote-computing arrangements drew closer scrutiny, Nvidia already began last year to limit China ties. It has required many of its cloud partners outside China to keep their Chinese customers below a certain level, which has shifted between 30% and 49%, though the rule wasn’t written into any contracts, people familiar with the matter said. Nvidia also urged some cloud partners to weed out Chinese nationals from top management and push out Chinese investors, the people said.
Cloud providers are setting their sights on regions other than Southeast Asia, such as Japan, Brazil, Central Asia and Europe, to build out new computing capacity that can serve Chinese customers.
Momentum in Washington is growing to crack down on the China workarounds.
The Commerce Department is working on rules that would add Malaysia, Indonesia and Singapore to a group of countries subject to export restrictions, people familiar with the matter said. The rules would require companies exporting powerful chips such as Nvidia’s Blackwell series to those countries to get a license that would prohibit Chinese customers from remotely accessing the computing power.
Malaysia said Friday it “will not allow itself to be used to get around export controls” and was investigating Megaspeed and its Malaysian affiliate over any possible re-export of AI chips to other countries.
Ryan Fedasiuk of the Foundation for American Innovation, a Washington think tank, said tighter regulation of Nvidia’s sales to data centers that lease computing power to Chinese companies was inevitable. “It’s incumbent on lawmakers in Congress and on the Trump administration to understand what’s going on,” he said.
Write to Jon Emont at jonathan.emont@wsj.com , Stu Woo at Stu.Woo@wsj.com , Patricia Kowsmann at patricia.kowsmann@wsj.com and Raffaele Huang at raffaele.huang@wsj.com
