Nvidia CEO Jensen Huang has long argued that the United States should keep selling AI chips to China rather than cutting it off. Reports that he had a relationship with an alleged Chinese spy now complicate that position.
The allegations
The Financial Times reported on Friday that Jensen Huang was involved with Alice Huang, a former executive at Megaspeed. Megaspeed is a customer of Nvidia. Jensen Huang admitted the relationship and sent an apology memo to the company on Sunday. U.S. intelligence officials believe Alice Huang was recruited by Chinese intelligence to gather information about the CEO and influence efforts to loosen chip export restrictions.
Nvidia’s independent directors are investigating the matter with outside legal counsel. Congress is already asking for answers.
China revenue and lobbying
China has been a major market for Nvidia, though it has shrunk in recent years due to strict U.S. export controls and a push by Beijing for domestic alternatives. In the three months ended July 26, Nvidia recorded $7.9 billion in revenue from customers headquartered in China. This represents roughly 8% of total revenue.
Huang has lobbied the U.S. government to expand access to China. Some of his efforts succeeded. He met repeatedly with President Donald Trump and administration officials last year. Afterward, the government reversed restrictions on Nvidia’s H20 chips and allowed exports of its more powerful H200 processors.
Huang has publicly called export controls a failure at a conference last year. In May, he said it was not wise for the U.S. and China to create two distinct AI ecosystems. He warned that shutting Nvidia out of China’s compute market would enable the country to develop its own AI chips to challenge Nvidia internationally.
Chips in Hong Kong
China is already moving in that direction. Reuters reported last week that about 600,000 H200 chips are being held in Hong Kong, awaiting shipment to mainland China. Beijing is pushing AI companies to prioritise buying chips from Chinese companies instead.
Impact on trust
The idea that Huang needed encouragement in the form of an attractive woman to push for greater access to China seems like a stretch. His lobbying efforts predate their reported meeting at an Nvidia event in early 2024. At the end of the day, Huang is a salesman trying to dominate one of the world’s biggest AI markets.
Still, the allegations involving Alice Huang open new scrutiny of the company’s business relationships. This could taint any assurances Nvidia offers that it can prevent sensitive technology from reaching unauthorised customers.
Once made, rumours of questionable allegiances can be hard to shake. Secretary of State Marco Rubio reportedly warned officials close to Trump earlier this year about Huang’s relationship with an alleged spy. Even if Nvidia’s investigation finds that Huang did not share secrets with his paramour, the question is whether he will be able to convince Washington that Nvidia can still responsibly do business with China.
Nvidia did not respond to a request for comment.
