Nvidia requires chip tracking for Southeast Asia partners

Nvidia ↗ 3.02% now requires customers in Southeast Asia to join its "fleet intelligence" chip-tracking system before they can become official Nvidia Cloud Partners (NCPs), Bloomberg reported on Friday, citing people familiar with the matter. The company has faced criticism that it hasn't done enough to keep its AI accelerators from reaching Chinese companies illegally. Bloomberg describes the new rule as a way to give Nvidia more visibility in a region that has long been used to reroute restricted goods.bloomberg.com

Using partner status as an incentive

Fleet intelligence tracks where participating companies' AI accelerators are located, along with other metrics. It remains voluntary. Nvidia is using the NCP label to get more customers to sign up, according to Bloomberg. Cloud providers want the designation because it serves as a public endorsement and gives them priority access to chips.au.finance.yahoo.com

Nvidia launched the tool nearly a year ago. It is mainly software for managing data centers, but because it records where individual parts are located, it also responds to US concerns about chips being diverted. By default, though, users don't have to share location data with Nvidia or the US government, Bloomberg reported. Nvidia declined to say whether existing partners will have to enroll to keep their status, or whether the requirement will apply outside Southeast Asia.au.finance.yahoo.com

The Megaspeed case

US rules generally bar Chinese companies from buying advanced Nvidia AI chips without a license. Even so, authorities believe firms there have obtained billions of dollars' worth of the hardware, mostly through smuggling networks in Southeast Asia, Bloomberg reported.bloomberg.com

Much of the scrutiny centers on Singapore-based Megaspeed International. The company has been under US and Singapore investigation for more than a year, and it won NCP status within a week of its founding in 2023. Last week, The New York Times ↗ 3.40% reported that Washington suspects one of Megaspeed's top executives of spying for Beijing. Chief Executive Jensen Huang called his interactions with the company "completely normal" and said Nvidia had "counted every one" of the GPUs Megaspeed deployed. Megaspeed denies wrongdoing, and key House Republicans have asked Huang for a briefing, according to Bloomberg.au.finance.yahoo.com

Wider crackdown

The tracking rule adds to other steps Nvidia has taken. Earlier this year, after the largest US chip-smuggling indictment, it removed half of the Asian firms it had pre-approved to buy chips. It has also told buyers not to rent more than half of their Nvidia computing power to Chinese companies, Bloomberg reported. The indictment came in March, when Super Micro Computer ↗ 4.43% co-founder Wally Liaw was arrested on charges of plotting to smuggle $2.5 billion worth of Nvidia GPU servers into China, TipRanks noted.tipranks.com+1

Nvidia and parts of Washington still disagree over who should stop smuggling. Some officials say the company has repeatedly missed warning signs. Nvidia says it follows the law as written and that it is up to government officials to identify bad actors.