In early March, Singapore authorities independently investigated the alleged illegal export of U.S.-produced AI chips that potentially bypassed U.S. export controls. Three men—two Singaporeans and one Chinese national—have been charged with fraud after the authorities found servers containing AI chips that have been shipped from the U.S. to Singapore and then to Malaysia. The servers’ shipment route raised concerns that they may have eventually been diverted to China. Despite not being legally obligated to enforce the unilateral export control measures of other countries, the authorities’ move to investigate and charge the individuals sends a signal about the Government of Singapore’s commitment to enforcing its international best practices based domestic law and export control regime. The Government of Singapore has offered joint investigations with the U.S. and reaffirmed that exploiting trade systems is intolerable. In response to these developments, the Government of Malaysia has also pledged to enhance regulations on semiconductor shipments, aiming to prevent the illicit flow of chips.
This smuggling incident has drawn international attention, underscoring not only the potential violation of export control regimes, but also the fragility of global supply chains. The case highlights the challenges of enforcing export controls across borders, particularly when goods are trans-shipped through global trade hubs. Given Singapore’s significance as a key international trade hub, this incident also highlights Singapore as a key middleman in managing global supply chains and enforcing international trade regulations. The investigation comes as the U.S. increases its crackdown on AI chip exports to China. On March 26, the Trump administration significantly expanded its trade blacklist, focusing on restricting China’s ability to develop advanced technologies like artificial intelligence, exascale computing, and hypersonic missiles with the aim of preventing the misuse of American technologies. The U.S. has a competitive disadvantage in the production of semiconductors relative to Asian economies. While the Trump administration is trying to lure investment in semiconductor manufacturing back home, it will take years for chipmakers to set up production in the U.S. Until then, the U.S. will need to rely on trusted alternative suppliers. Singapore, along with Malaysia, Taiwan Japan and South Korea, all make up various key nodes in the global value chains for semiconductors and related equipment.
