SAN FRANCISCO, Oct 14 (Reuters) -

U.S. Republican Senator Tom Cotton has asked the Commerce

Department to investigate Singapore-based Megaspeed for

allegedly diverting Nvidia ( NVDA ) chips used for artificial

intelligence, according to a letter seen by Reuters on Monday.

The letter cites an October report in The New York Times that

detailed the alleged diversion of Nvidia ( NVDA ) chips by Megaspeed, a

cloud computing company. According to the report, Megaspeed

funneled Nvidia ( NVDA ) chips to Malaysia and Indonesia that appeared to

serve customers in China remotely.

Megaspeed did not immediately respond to a request for

comment. The Singapore Police Force said on Tuesday that

"investigations are ongoing into Megaspeed for suspected

breaches of our domestic laws."

A Nvidia ( NVDA ) spokesperson said it had engaged with the U.S.

government regarding Megaspeed, performed its own inquiry, and

had not identified any reason to believe products had been

diverted.

The U.S. has blocked high-end AI chips from export to China

due to national security concerns.

In July, Reuters reported that demand for repairs of banned

Nvidia ( NVDA ) products boomed, which was also cited by Cotton in his

letter. In 2024, Reuters reported that China had obtained

high-end Nvidia AI chips in spite of a ban.

"As the Trump administration recently indicated, export

controls are an important tool as he navigates America through

perilous times against an increasingly aggressive and emboldened

adversary," Cotton wrote. "The pervasiveness of chip smuggling

undermines the president and allows U.S. adversaries access to

advanced technology where the U.S. maintains significant

leverage."

Cotton said he would continue to work with U.S. President Donald

Trump to curb illegal diversions of U.S. chips. His letter was

addressed to Commerce Secretary Howard Lutnick.

Cotton previously introduced legislation that would require

location verification of chips after they are sold.

Last week, Trump unveiled levies of 100% on China's U.S.-bound

exports and new export controls on "any and all critical

software" by November 1. On Sunday, China said the latest

tariffs were hypocritical.