AI Chip War Turns Singapore Into a U.S.-China Battleground

Chinese companies accounted for 20.6 percent of Singapore's new fixed-asset investment commitments last year, surpassing the United States at 17.3 percent for the first time — and that record influx has now made the city-state a frontline in the U.S.-China contest over advanced AI chips.

According to a report published November 12 by Hong Kong's South China Morning Post, a rapidly growing number of Chinese companies use Singapore as a base for overseas expansion. The trend spans consumer brands and technology firms alike, and Washington has responded by tightening scrutiny of the region's data centers and semiconductor supply chains. Market observers now expect Singapore and its neighbors to face explicit demands to pick sides in advanced technology.

Why did Chinese companies pick Singapore?

The corporate migration is broad. Coffee chain Luckin Coffee launched its overseas business in Singapore in 2023 and opened its 100th local store this past September. Milk tea brand CHAGEE has expanded steadily since opening its first overseas store in the city in 2019.

The technology sector moved headquarters, not just storefronts. Online fast-fashion company Shein and game developer HoYoverse relocated their global headquarters to Singapore. TikTok parent ByteDance and Chinese-linked data center operator DayOne expanded local operations.

The investment figures confirm the shift. Chinese government statistics show China's direct investment in Singapore totaled USD 16.9 billion last year — more than its investment in all other Southeast Asian countries combined, and more than its investment in the United States and the European Union. Singapore's Economic Development Board supplied the 20.6 percent fixed-asset figure.

Several factors drew Chinese firms. Singapore has a large ethnic Chinese population, English as an official language, a concentration of multinational companies, a stable legal framework and abundant skilled professionals. The result, in recent years, is what observers call "Singapore-washing": Chinese companies establishing headquarters or corporate entities in the city to dilute their perceived Chinese identity and reduce geopolitical risk.

How did TikTok's restructuring set the precedent?

TikTok tested whether a Singapore-based management structure could satisfy Washington. It placed key executives in the city and appointed Singaporean Shou Zi Chew as chief executive officer. The arrangement failed to dispel U.S. national security concerns over ties to Chinese parent ByteDance.

In January this year, TikTok established a separate joint venture to run its U.S. service and transferred an 80.1 percent stake to U.S. and global investors, including Oracle, Silver Lake and UAE investment firm MGX. ByteDance's stake fell to 19.9 percent. Operational authority and control over U.S. user data, recommendation algorithms and content management moved to the new entity.

What is the Nvidia chip smuggling case?

A more recent controversy centers on allegations that Nvidia's advanced AI chips reached China through Singapore. At its center is Huang Le, also known as Alice Huang, identified as having had an extramarital relationship with former Nvidia CEO Jensen Huang and suspected of ties to Chinese intelligence agencies.

She stands accused of involvement in supplying China with at least USD 7.5 billion worth of Nvidia AI chips through a corporate network built by her family, including Singaporean cloud company Megaspeed and China's Shanghai Century Litong.

On November 12, the Singapore government said it found insufficient evidence to substantiate criminal allegations against Huang relating to Megaspeed. It nonetheless issued her a stern warning and barred her from reentering the country, citing inaccurate information she provided during the investigation.

How do Chinese firms use Southeast Asian AI infrastructure?

Market observers say the episode could constrain a well-established workaround: Chinese companies building data centers in Southeast Asia or renting computing capacity from local cloud providers running Nvidia chips to circumvent U.S. export controls.

The Wall Street Journal reported in June last year that a Chinese AI developer sent 4 engineers to Malaysia who rented roughly 300 Nvidia-equipped servers at a local data center to train an AI model. The engineers brought approximately 80 terabytes of training data on hard drives and carried the results, including model parameters, back to China.

In March this year, reports emerged that ByteDance was working with Southeast Asian cloud provider Aolani Cloud to deploy about 36,000 Nvidia Blackwell B200 chips in Malaysia.

Illegal shipments have surfaced repeatedly:

• February 2025: Singapore charged 3 people, including Chinese nationals, with falsely declaring end users of products purchased from U.S. server makers Dell and Super Micro Computer. The servers, possibly containing advanced Nvidia chips, transited Singapore for Malaysia, with suspicions they ultimately reached Chinese AI company DeepSeek.
• August 2025: The U.S. Department of Justice arrested 2 Chinese nationals who sent advanced GPUs through California-based ALX Solutions to logistics companies in Singapore and Malaysia before illegal export to China. Investigators recorded at least 21 related shipments and found indications that Chinese and Hong Kong companies paid the exporter.
• March 2026: U.S. prosecutors charged 3 people, including Super Micro Computer co-founder Wally Liaw, with illegally shipping USD 2.5 billion worth of advanced AI servers to China. The servers went to Taiwan and Southeast Asia, were repackaged, then sent on — with fake servers installed in preparation for on-site inspections.
• June and October 2026: Malaysian customs seized 72 servers equipped with advanced AI chips at Kuala Lumpur International Airport in June, then intercepted another 30 last month. The two seizures were valued at USD 12.93 million and USD 12.11 million respectively. Customs believes the smuggling ring made at least 5 illegal export attempts.

What are U.S. policymakers doing?

U.S. policy now targets how American-made semiconductors are used abroad. On November 4, the Financial Times reported that Oracle canceled a USD 7 billion AI chip rental contract with Tencent under U.S. government pressure. The contract would have let Tencent use roughly 100,000 advanced AI chips at several Southeast Asian data centers for 5 years.

In May, the U.S. Commerce Department issued guidance restricting Chinese companies from obtaining advanced semiconductors through local subsidiaries in Southeast Asia. Congress is pursuing the Remote Access Security Act (RASA), which would expand the Commerce Department's authority to regulate remote access to advanced semiconductors through overseas cloud services.

Can Southeast Asia keep balancing both powers?

The regulatory tightening strains a strategy the region has run for years: trade and production-network ties with China alongside U.S. investment and technology. After the U.S.-China trade war began in 2018, companies relocated factories from China to Southeast Asia to avoid U.S. tariffs, converting great-power conflict into an investment windfall.

Those options are narrowing. Under U.S. pressure, Malaysia introduced a prior-approval requirement in July last year for the export, transshipment and transit of U.S.-made high-performance AI chips. On November 12, Malaysia said it was considering legislation to oversee data center operators, facility locations and the volume of GPUs entering the country.

Both powers are now building rival blocs. The United States launched "Pax Silica" in December last year to reorganize supply chains around friendly countries — spanning critical mineral mining and refining, advanced semiconductor production, and data center and AI infrastructure. South Korea, Japan, Singapore and the Philippines are current participants.

China answered in July by leading the establishment of the World Artificial Intelligence Cooperation Organization, an intergovernmental body headquartered in Shanghai that aims to jointly develop AI technology, strengthen developing countries' capabilities and shape international AI rules and standards. Indonesia, Laos, Russia and Pakistan are among 29 signatories to its founding agreement.

As the two frameworks harden, the diplomatic space Singapore built its launchpad business on is shrinking from both directions.