“China Tightens Oversight of Domestic Companies Relocating to Singapore”
“U.S. Moves to Curb Semiconductor Exports to China via Third Countries”
Efforts to tighten U.S. restrictions on semiconductor exports to China have gained momentum again in the wake of an affair scandal involving Nvidia CEO Jensen Huang. In particular, a semiconductor bill being advanced by the U.S. Congress is expected to affect Samsung Electronics’ and SK hynix’s businesses in China.
According to Hong Kong’s South China Morning Post (SCMP) on Wednesday (local time), Chinese authorities are stepping up oversight of attempts by Chinese companies to move key business units to Singapore. SCMP reported that scrutiny is expected to intensify further after revelations that Alice Huang, who was suspected of being a Chinese spy because of her alleged affair with CEO Huang, used Singaporean company Megaspeed to reroute Nvidia semiconductors to China sparked controversy in the United States.
Singapore has long served as a base for Chinese companies seeking to expand overseas amid U.S.-China trade tensions. The practice of using Singaporean subsidiaries to expand overseas while keeping a relatively low profile as Chinese companies is known as “Singapore washing.”
Megaspeed, which is linked to CEO Huang’s scandal, has drawn attention to this business structure. Megaspeed is known to have had financial and business ties with Chinese companies. In June 2024, China’s Alibaba lent money to Megaspeed’s Malaysian subsidiary through its Singaporean subsidiary. SCMP reported that Alibaba’s business ties also played a role as Megaspeed grew into an official cloud partner of Nvidia.
The United States is also moving quickly on legislation to close loopholes in semiconductor export controls on China. The Wall Street Journal (WSJ) reported Wednesday that leading lawmakers from both parties in Congress are seeking to include three bills to tighten semiconductor export controls in the National Defense Authorization Act (NDAA).
The bills are the AI Overwatch Act, the Chip Security Act and the MATCH Act. The Chip Security Act, in particular, focuses on closing export-control loopholes exposed by allegations that Megaspeed rerouted supplies. It would require the introduction of security devices capable of tracking the location of semiconductors to prevent advanced U.S.-made chips from being illegally diverted to China and other destinations via third countries.
The bills have been discussed in Congress since early this year, but lost momentum after the Trump Administration allowed U.S. technology companies such as Nvidia to export semiconductors to China. However, WSJ reported that CEO Huang’s scandal and the Democratic Party’s recent gains of majorities in both the House and Senate following the midterm elections have provided fresh impetus for efforts to tighten restrictions.
The MATCH Act, which would tighten allied countries’ controls on exports of semiconductor manufacturing equipment to China, could also affect South Korean chipmakers with production facilities there. As the United States presses its allies to impose export restrictions comparable to its own, Samsung Electronics and SK hynix could face greater restrictions on bringing equipment into their Chinese factories and upgrading their facilities.
Hot Picks Today
Samsung Electronics produces NAND flash memory in Xi’an, China, while SK hynix produces DRAM in Wuxi and NAND flash memory in Dalian. On the other hand, if Chinese semiconductor companies have difficulty obtaining advanced equipment, South Korean companies could benefit competitively. However, with congressional negotiations over the NDAA at an impasse, it remains uncertain whether the regulatory bills will ultimately pass.
This content was produced with the assistance of AI translation services.
© The Asia Business Daily. All rights reserved. Unauthorized AI training and use prohibited.
