Jensen Huang runs Nvidia, the corporate giant that sells the chips the United States counts on to beat China in artificial intelligence. American intelligence agencies, the New York Times reports, believed that a woman close to him had been recruited by China’s spy agency, the Ministry of State Security, to collect intelligence on him. Officials who saw the intelligence believed the two were having an affair. She also worked for one of his company’s biggest customers in Asia.
Alice Huang was an executive at Megaspeed, a Singapore company that rents out the use of Nvidia’s AI chips to Chinese firms. Its Malaysian affiliate bought at least $4.8 billion of Nvidia-equipped hardware in under two years, according to trade records. On 8 November, Huang admitted to his staff that he had been unfaithful to his wife, though he didn’t name the woman. The New York Times reports that he told Nvidia’s board it was her.
Until last month, Nvidia was the world’s most valuable company. It is still worth about $4.3 trillion. Jensen Huang wants to sell more chips to China. Washington has been taking his advice on whether to let him. He has become both the chip merchant and the policy adviser.
Washington has confused Nvidia’s commercial interests with America’s national interests
The affair has exposed a much bigger problem. Washington has confused Nvidia’s commercial interests with America’s national interests. Beijing wants American computing power, and Jensen Huang wants Chinese customers. Their interests need not be identical to pull American policy in the same direction. Now the arrangement faces a reckoning. After last week’s midterms, Elizabeth Warren is poised to chair the Senate Banking Committee, with the power to compel testimony. She has joined Republican Jim Banks in demanding answers about Nvidia. The Trump administration may soon have to defend the same damaging China strategy its favourite chipmaker was helping shape.
American export rules stop Nvidia from selling its most advanced chips to China. They do not stop a Chinese company renting the same chips, over the internet, from a data centre in, for instance, Malaysia. Megaspeed built its business in that loophole, and Alibaba was among its clients. Nobody had to smuggle a chip into China for a Chinese company to use one. Washington has known about this gaping loophole for some time. In January, the House voted 369 to 22 to close it, and now the bill sits with the Senate, which has yet to pass it into a law.
The White House’s own AI plan, published in July last year, declares that ‘the AI race is America’s to win’. Less than three weeks later, the President described how he had haggled with Huang for a cut of Nvidia’s chip sales to China. The chip in question was the H20. Nvidia designed it for China, deliberately weakened so that it fell just under the limits Washington had set on AI chips allowed to be sold in that country. It was still the best Nvidia processor Chinese companies could legally buy, and China was a market Huang said would be worth $50 billion a year within two or three years.
In August last year, Trump said he wanted 20 per cent of the H20’s sales revenue from China. Huang talked him down to 15. ‘So we negotiated a little deal,’ Trump said. This created a damaging conflict of interest: the US government gets to decide whether China may buy the chip – but also stands to profit. Two months later, Trump was briefed that Alice Huang was presumed to be a spy, according to the Times. In December he announced conditional permission for sales of H200, a different chip, to approved Chinese customers, with a proposed 25 per cent government share.
Trump subsequently appointed Jensen Huang to his science advisory council and gave him the National Medal of Science. Asked on 8 November if he should have acted on the intelligence warning, Trump replied: ‘No, I don’t think so.’ Last month, Trump disclosed that he had bought and sold Nvidia stock two months earlier. (The White House said independent managers made the trades and there were ‘no conflicts of interest’.)
Under two presidents, Trump and Joe Biden, Nvidia has sold Washington the same argument, and it is not a stupid one. The argument starts from a fact. China has its own answer to Nvidia. Huawei, the Chinese telecoms company that Washington put on a trade blacklist in 2019, now designs AI chips of its own. Huawei chips are less powerful than Nvidia’s, but Beijing is pushing Chinese firms to use them. Block American chips, says Huang, and Chinese developers will switch to Huawei for good, leaving America with neither the market nor the leverage for a negotiation. The Trump White House bought it, promising in its AI plan to export America’s ‘full AI technology stack’.
The argument has one crucial condition. Keeping China hooked on American chips is only secure if America knows where the chips end up – and that is not in military weapons that China wants to use against the West or the mass surveillance equipment it uses against its own people.
Keeping track is a tough task. Since last year, American prosecutors have charged several people with smuggling Nvidia chips into China, some of them routed through Malaysia. (I wrote about one indictment in The Spectator last April.) An American adviser to US technology companies operating in China told me that some businesses say they have long tolerated unauthorised routes, including smuggling and pirating, to Chinese customers. He pointed to Microsoft, whose software was pirated across China for years. In 1998 Bill Gates told university students that if the Chinese were going to steal software, ‘we want them to steal ours. They’ll get sort of addicted.’ In the adviser’s view, chipmakers face the same temptation – so they have little incentive to crack down. (He did not specifically name Nvidia.)
Keeping China hooked on American chips is only secure if America knows where the chips end up
The problem: the seller does the checking. Nvidia rejects government kill switches and backdoors in its chips. It offers its own tracking software instead. And the agency at the Commerce Department tasked with monitoring sensitive chip exports has handled Nvidia with special care. Since Trump returned to office, agents have needed sign-off from senior department officials before investigating Nvidia or even contacting it, multiple newspapers have reported.
Since late 2024, Department of Commerce agents had been investigating whether Megaspeed helped Chinese companies get around American chip rules, which Megaspeed denies. In August last year, according to the New York Times, they received an email from Nvidia’s chief lawyer, Tim Teter. He said the department official in charge of export controls had told Nvidia it could contact them about the case. The agents were alarmed, according to the report. Nvidia could itself come under investigation, and some agents thought it broke government procedure and could taint the case.
Congress is now moving to end the cosy arrangement, and the push comes from both parties. Tom Cotton, the Arkansas Republican who chairs the Senate Intelligence Committee, asked the Commerce Department to investigate Megaspeed in October last year, around the same time Trump was briefed on the alleged spy Alice Huang. Cotton also wrote the bill that would make chipmakers verify where their advanced chips end up. In February Elizabeth Warren, the Massachusetts Democrat who has spent years attacking corporate power, signed on to it. It takes a great deal to put those two on the same side.
In January, Democrats take control of both houses of Congress. Warren is poised to chair the Senate Banking Committee, where the same bill to stop Chinese companies renting US AI chips from data centres abroad – one practice that enabled the scandal hitting Nvidia – is stuck. In June, Jensen Huang turned down her request that he testify in public about Nvidia’s business in China. Next year she may not need to ask him.
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