As Washington weighs tighter export rules after the Megaspeed revelations, Karachi data centres that bought by the book face collateral risk.
LAHORE: The scandal engulfing Nvidia chief executive Jensen Huang is fast becoming a test for the world’s AI chip supply chain, and Pakistan, which has only recently begun hosting Nvidia’s advanced graphics processors on its own soil, has more riding on the outcome than its distance from Santa Clara suggests.
Huang, 63, told Nvidia staff on Sunday that he had been “unfaithful” to his wife, after US media reported that American intelligence agencies believe Alice Huang, a former executive of Singapore-based Nvidia customer Megaspeed, is an asset of China’s Ministry of State Security. Huang did not name the woman in his memo but tied his conduct to the national security concerns raised in news reports, and said he supports an independent investigation and will cooperate fully.
China’s government has called the espionage allegations “baseless and purely slanderous smears”. Alice Huang and Megaspeed did not respond to requests for comment from US media, and Megaspeed has said earlier reporting contained “misleading information and incorrect insinuations”.
A $1.7 trillion slide
Investors have punished the uncertainty. Nvidia shares fell 4.3% on Monday, erasing nearly $200 billion in value, and a further 5.5% on Tuesday to $168.89. The stock is down more than 18% in November and about 31% from its Oct 6 record, a loss of more than $1.7 trillion in market value, and investors have filed a lawsuit.
Nvidia’s board has hired former acting US attorney Joon Kim and law firm Wachtell, Lipton, Rosen & Katz to run its inquiry. The board said it had “no reason to believe that either national security or Nvidia secrets were compromised” but would examine all available information, and a company spokesperson said Huang would keep leading the company “without interruption”.
President Donald Trump called Huang “an honourable guy” and said the CEO told him he had “absolutely no idea” the woman was a spy. The New York Times reported on Tuesday, however, that Secretary of State Marco Rubio had warned Trump aboard Air Force One in May, before Huang joined the presidential delegation to Beijing.
Billions in chips, and a slow blacklist
At the heart of the case is the flow of hardware. Megaspeed reportedly bought $4.8 billion in Nvidia chips over two years, and both Washington and Singapore confirmed investigations last year into whether it helped Chinese firms evade export embargoes. In 2024 a Commerce Department official visiting its Malaysian data centre found Nvidia equipment still in boxes.
The Information reported this week that Shanghai Century Litong, part of a network of companies linked to Alice Huang’s family that became an Nvidia preferred cloud partner, facilitated about $7.5 billion in Nvidia chip purchases, including banned chips. The Financial Times reported that the Commerce Department had delayed blacklisting Megaspeed despite requests from the State Department, Treasury, the Pentagon and the Energy Department.
Nvidia had said in 2025 it had no reason to believe its products were diverted and that Megaspeed ran a small commercial cloud permitted under US rules.
Why Karachi is watching
For Pakistan, the timing is awkward. The country’s sovereign AI build-out depends almost entirely on licensed American hardware, and the political response in Washington is already turning towards tighter controls. Senate Democratic leader Chuck Schumer on Tuesday urged lawmakers to quickly approve new restrictions on US chip sales, while House Foreign Affairs Committee chairman Brian Mast has threatened to subpoena Huang if he does not respond by Wednesday to a request for a closed-door briefing on Nov 18.
Pakistan already sits on the US restricted list for advanced chip exports. Data Vault Pakistan, which opened the country’s first AI data centre in Karachi in 2025, says it secured more than 3,000 Nvidia GPUs only after clearing strict technical, compliance and financing checks under US export-control rules, and launched Pakistan’s first locally hosted sovereign AI cloud with Telenor Pakistan last December.
The state is now a customer too. In July, the National Telecommunication Corporation signed a three-year contract with Data Vault to deploy Nvidia-licensed H200, A100 and B200 hardware for government AI services, and in August Master Group’s Indus Cloud launched Pakistan’s first Cisco AI cluster built on brand-new Nvidia H200 chips.
The next step is the most exposed. Supermicro sent a team to Karachi this summer to assess installing Nvidia’s top-tier Blackwell B200, B300 and GB300 NVL72 systems, a move that depends on US export authorisations assessed separately from Data Vault’s existing approvals.
Clean record, collateral risk
The Megaspeed case cuts in Pakistan’s favour on one count: the alleged leakage ran through Singapore, Malaysia and mainland Chinese entities, not through Pakistani buyers, who have gone through Nvidia-approved channels and US licensing.
The danger lies in how Washington responds. A recent analysis in The Nation warned that mid-sized, dollar-dependent states risk becoming collateral damage in chip disputes because banks, vendors and cloud providers tend to over-comply with ambiguous rules, and urged Islamabad to set up a dedicated sanctions and export-control unit.
Pakistan’s two-track approach adds to the scrutiny it could attract. Alongside the Nvidia clusters, Gul Ahmed Energy Group’s Quantum Global Data Centre is building a Tier III facility with Huawei, and Alibaba Cloud has signed an MoU with Punjab as data centre talks continue. Lahore’s own AI and robotics expo this week put Pakistan-China industrial ties front and centre.
If licensing tightens, firm firewalls between the Nvidia and Huawei tracks, and a compliance record that Islamabad presents to Washington proactively rather than defends after the fact, are likely to be what keeps Pakistan’s US approvals intact.
Millions dollar at stake at home
Pakistan spends an estimated $700 million to $800 million a year on foreign cloud and computing services, according to industry figures, money that local GPU capacity is meant to keep in the country. Punjab has made AI a compulsory school subject and launched Pakistan’s first AI intelligence hub in Lahore, while ICT exports rose 19.7% as the tech sector expanded abroad.
Each of those plans assumes a steady supply of licensed compute. A slower or more cautious licensing regime would raise costs for Pakistani start-ups and universities that are only now getting access to the hardware at home.
Huang has pulled out of the ElevenLabs Summit and the Anthropic CEO Forum. Nvidia reports quarterly earnings on Nov 17, the day before the briefing Republicans want, and investors will listen for any change to China guidance and any word on export licensing.
For Pakistan, the more consequential decision may come from the Commerce Department rather than Nvidia’s boardroom: whether Washington answers the Megaspeed failures by targeting the intermediaries that leaked, or by tightening the door for every buyer outside its closest circle.
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