A major scandal involving Nvidia founder Jensen Huang and a suspected Chinese spy based in Singapore has cast a spotlight on the city-state’s success as a global chip hub – and a location for alleged illicit trade.

On Thursday, Huang stepped down from the US chip giant after admitting he had an affair. He was reportedly involved with a woman named Alice Huang, who ran Singaporean data centre company Megaspeed, a major buyer of Nvidia’s chips.

For decades, Singapore has painstakingly cultivated a reputation as an open, business-friendly economy offering easy access to both the US and Chinese markets.

With the AI boom, it has become a major hub for the trade of high-end semiconductor chips in recent years.

Singapore was the second-largest billing centre globally last year for Nvidia, accounting for nearly a fifth of what the US chip giant earns.

But notably, less than 1% of its earnings were for chips that actually entered Singapore, as the island acts as a hub for many Asian companies to place orders and send them elsewhere.

Since 2022, when the US restricted advanced American semiconductors from being exported to China or acquired by Chinese companies, US officials have been concerned that other countries such as Singapore could be used by Chinese companies to gain access to the chips.

Megaspeed is a case in point.

It became the biggest buyer of Nvidia’s chips in South East Asia and is suspected of giving backdoor access to these chips to Chinese companies via its data centres in Malaysia, Indonesia and Thailand.

While Singapore does not prohibit the transfer of advanced AI chips to companies abroad, such moves can breach US export controls.

Singapore has said that while it does not enforce “unilateral export controls imposed by other countries” it expects all companies in its jurisdiction to respect such regulations.

The city-state has had some success in policing this.

It has charged four companies and five individuals – including Chinese nationals – for various offences including fraud, following US concerns that Chinese AI company DeepSeek had been buying Nvidia chips from third parties in Singapore, among other places.

They also tried to probe Megaspeed, but were faced with a number of difficulties.