Chinese AI Firms Race to Reserve Overseas Nvidia Capacity Before US Rule

Chinese AI companies are trying to reserve Nvidia-powered computing capacity at data centers outside China before Washington can close that route, Reuters reported on Nov. 12, citing three people familiar with the matter. The same day, The Information reported that the Commerce Department is finalizing a rule that would bar Chinese AI firms from remotely accessing advanced chips through data centers in seven more countries, including Malaysia, Singapore and Thailand, with an announcement possible this month.

The rush has a clear trigger. The companies fear that the scandal around Nvidia CEO Jensen Huang will push the United States to tighten rules on remote use of advanced chips, according to Reuters.

Who is reserving capacity?

According to Reuters, the activity spans several tiers of the Chinese market:

• A major Chinese cloud provider has discussed internally whether to lock in overseas Nvidia capacity.
• Some companies have contacted data center operators about reserving it.
• Smaller AI companies are considering approaching large computing rental providers in Southeast Asia.

Reuters did not name the companies. It also reported rising demand for restricted Nvidia chips in China's grey market, where traders are stockpiling processors in anticipation of a broader crackdown.

Renting has been the workaround of choice. Chinese labs have reached Nvidia's newest chips without importing them by leasing clusters abroad. CNBC reported last week that Moonshot AI sought access to Blackwell clusters from European neoclouds. Bloomberg has reported that Moonshot rented 32 B300 servers, a figure Moonshot disputes. Nvidia, for its part, has reportedly told some cloud partners to keep Chinese business below 50 percent.

The takeaway: rental capacity abroad has become the main channel for Chinese access to Nvidia's latest silicon, and that channel is now under direct threat.

How does the Huang scandal tie in?

The enforcement pressure around this market was already building before the rule. Huang has acknowledged being unfaithful to his wife. The New York Times reported that the woman was Alice Huang, a former executive at Megaspeed, and that US authorities had concluded she was a Chinese intelligence asset. Reuters said it could not verify that claim, and China has denied it.

Reuters also reported that Alice Huang had business and investment ties to Tencent and Alibaba, and that an Alibaba subsidiary financed a Malaysian company linked to Megaspeed. Megaspeed has faced scrutiny over suspected diversion of Nvidia chips to China, and it denies diverting chips.

Other enforcement pressure points have emerged. Axios reported that Treasury Secretary Scott Bessent confronted Commerce Secretary Howard Lutnick over Commerce's failure to blacklist Megaspeed. Reuters reported that a PLA-linked university bought H200 chips despite sitting on the US blacklist. Lawmakers are also pushing to write China chip limits into the defense bill.

In short, the personal scandal and the export-control story have converged on the same question: how Chinese buyers keep reaching US chips.

Who pays?

Investors moved first. By 05:08 GMT on Thursday, Nov. 12, Alibaba had fallen about 5 percent to HK$95.6 and Tencent about 1.5 percent to HK$403.6 in Hong Kong trading, according to Investing.com. Bloomberg reported that Alibaba dropped as much as 7 percent as the Nvidia saga raised chip-access fears. Tencent reports third-quarter results on Nov. 18, and Alibaba its September-quarter results on Nov. 19.

Data center operators in Malaysia, Singapore and Thailand that rent Nvidia capacity to Chinese customers would lose that business if the rule covers existing contracts — a point that has not been reported either way. For Nvidia, overseas rentals to Chinese firms are revenue that does not appear as China sales, and the rule would cut into it at a moment when its board is weighing Huang's future. Nvidia reports quarterly results on Nov. 17.

Does Commerce have the legal authority?

The rule rests on contested ground. Current law does not clearly give the Commerce Department authority to regulate remote, cloud-based access to restricted chips. A Baker McKenzie attorney told The Information that the department lacks that authority under existing statute.

The Remote Access Security Act would grant it explicitly. The House passed the bill 369-22 in January, and it awaits Senate action. Commerce is still consulting other agencies before the rule can be finalized, The Information reported.

The open question is whether the rule survives a legal challenge before the Senate acts. If it stands, Chinese firms holding overseas capacity contracts face a direct cutoff, and Nvidia loses a stream of revenue that never showed up as China sales.