(Bloomberg) -- Nvidia Corp. is stepping up monitoring of AI accelerators sold in Southeast Asia, a strategic step to curtail semiconductor smuggling after criticism it hasn't done enough to stop shipments from illegally reaching Chinese companies.
The chipmaker now requires customers in the region to enroll in its so-called fleet intelligence system — which tracks the location of AI accelerators owned by participating companies, among other metrics — in order to become official Nvidia Cloud Partners, or NCPs, according to people familiar with the matter.
The NCP designation is highly coveted for AI cloud computing providers, granting both a public stamp of approval and preferred chip access from a company that plays kingmaker to the industry. Nvidia's idea is to use the carrot of that label to encourage broader uptake of what remains a voluntary chip tracking program, said the people, who requested anonymity to discuss a confidential new measure.
That could provide more visibility into how Nvidia hardware moves through a region that's long been a transshipment point for restricted goods. The US government broadly prohibits Chinese companies from purchasing advanced Nvidia AI chips without a license, though authorities believe firms there have nonetheless gotten their hands on billions of dollars' worth of the hardware, primarily via smuggling networks in Southeast Asia.
As cases mount, Nvidia and some US authorities have sparred over who is responsible for solving the problem. Corners of Washington are frustrated that the chipmaker has repeatedly missed red flags, while Nvidia has shot back that it follows laws as written — putting the onus on government officials to identify bad actors. Those officials, meanwhile, disagree on the appropriate tack for their own response, with frustration brewing in the Trump administration and on Capitol Hill.
There is no better illustration of the quagmire than Megaspeed International Pte., which has been under US and Singapore investigation for more than a year and returned to the limelight last week after The New York Times reported that Washington suspects one of the company's top executives of spying for Beijing, leveraging her close relationship with Nvidia Chief Executive Officer Jensen Huang.
In response, Huang said his interactions with Megaspeed were "completely normal," while an Nvidia spokesperson said the chipmaker is "confident that if the US government believes that any person is a threat to American industry, it would let us know." That aligns with Nvidia's posture on earlier chip diversion suspicions; the chipmaker said last year that it asked the US government whether it needed to alter its relationship with Megaspeed, and was told no. Megaspeed has denied wrongdoing.
Nvidia's response hasn't satisfied Capitol Hill, where key House Republicans this week requested a briefing from the CEO.
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The status of Nvidia's own due diligence on Megaspeed — concerning the smuggling suspicions, rather than espionage — is also unclear. Huang said last week that "we've studied all their deployments of our GPUs and counted every one," referring to graphics processing units. That goes a step beyond previous statements on the matter from Nvidia, which said last year — after getting pressed about discrepancies in Megaspeed's data center footprint — that it had identified "substantially" all the products sent to the company.
Nvidia also pledged in December 2025 to visit Megaspeed's data centers again in the near future, but since then has repeatedly declined to say whether such checks have occurred. That's even after Megaspeed's main computing hub landlord dropped it as a tenant and two other data center operators in Southeast Asia disputed Nvidia's account of the location of Megaspeed's chips. Asked again this week whether Nvidia had conducted any additional checks that would support its CEO's assertions about counting "every" processor, a spokesperson declined to comment.
In the meantime, however, Nvidia has begun flirting with self-regulation. The biggest such example is fleet intelligence — first debuted nearly a year ago, after the US began prosecuting alleged chip smugglers and Washington's suspicions about Megaspeed became public. It's primarily a data center management tool, collecting a range of information about deployments of Nvidia hardware that's useful for operators. By also gathering geolocation information for individual parts, though, it doubles as a response to US diversion concerns.
The product underscores both that Nvidia has the tools to geolocate its chips and that it remains cautious about using them. For one, fleet intelligence does not by default require participants to share location data with Nvidia or the US government. An Nvidia spokesperson previously told Bloomberg that should Washington regulators want information from the database, they would communicate directly with users, without elaborating further.
A big question for the latest update, related to NCP designations, is whether Nvidia may ultimately require existing NCPs — such as Megaspeed, which won the label within a week of its 2023 creation — to sign up to maintain their privileged status. Nvidia declined to comment on this question or answer others for this story, including whether the new NCP requirement would be applied in regions beyond Southeast Asia.
Outside of fleet intelligence, Nvidia has taken several other steps to limit Chinese companies' access to its hardware. In the wake of the biggest chip smuggling indictment in the US, the company earlier this year removed half of the Asian firms it had pre-approved for chip purchases, Bloomberg has reported.
More recently, it began telling buyers not to rent more than half of their Nvidia computing power to Chinese companies — even though Washington generally allows Chinese firms to use accelerators owned by others overseas. "Longstanding US policy encourages every cloud to build on American infrastructure and to win business everywhere they can," an Nvidia spokesperson told The Financial Times, which first reported that move. The spokesperson didn't explain the reasoning behind the new Nvidia measure.