The Jensen Huang scandal became a U.S. security nightmare... Suspicious of allowing AI chip exports to the public

As Nvidia CEO Jensen Huang admitted to an affair with a woman suspected of being a Chinese spy, a personal scandal is spreading into a ripple effect that will shake up America's national security and semiconductor export policy to China.

In particular, while CEO Hwang has been actively persuading President Donald Trump to ease export controls on artificial intelligence (AI) semiconductors to China, the controversy is growing as it became known that U.S. intelligence authorities had even written a confidential memo warning of his possible involvement as a Chinese spy.

The Wall Street Journal (WSJ) said on the 10th (local time), "How did an affair case turn into a national security nightmare?" and focused on the impact the relationship between CEO Hwang and Alice Hwang, a suspected Chinese spy, had on policy decisions and the authorities' investigation process surrounding the U.S.-China competition for AI hegemony.

◇ When Alice Hwang called for a drink, Jensen Hwang showed up… Investigation begins in the US, Taiwan, etc.

The exact time when CEO Hwang and Alice Hwang first met has not been confirmed, but their relationship is said to go back at least to 2024.

According to WSJ, the two met at an Nvidia event in California in March 2024, and were also seen together in Taipei, Taiwan in June of the same year.

At the time, CEO Hwang, who was staying in Taipei to attend a computer industry expo, received a call from Alice Hwang, who was hanging out with technology industry executives at a bar, and showed up at the scene a few minutes later. Alice Hwang reportedly introduced CEO Hwang to her group as “my great friend.”

The two showed a close relationship in May last year, kissing each other on the cheek at a dinner party in Taipei.

Alice Huang, known as a former Chinese state-run TV reporter, has been an executive at Megaspeed, a Singaporean data center company spun off from the Chinese company 7Road Holdings, since 2023. Megaspeed has been promoting itself as a cloud service provider based on NVIDIA semiconductors in the Asia-Pacific region.

In late 2024, the U.S. Department of Commerce and Justice began investigating whether Megaspeed illegally leaked Nvidia's AI semiconductors to China.

Authorities in Taiwan and Singapore are also said to have deployed on-site surveillance teams, keeping in mind the possibility that Alice Huang may have been involved with Chinese intelligence agencies. However, the Singapore government denied reports that its authorities had investigated Alice Huang over suspicions of Chinese links.

Nvidia's board of directors announced on the 8th that it had begun an independent investigation into whether CEO Hwang had been targeted by a foreign intelligence agency. However, he expressed trust in CEO Hwang, saying there was no reason to believe that national security or company confidentiality had been violated.

In a memo sent to employees last weekend, CEO Hwang acknowledged the affair and apologized to his family and colleagues.

◇ CEO Hwang is close to Trump… H20 sales allowed after lobbying for export control relief

CEO Hwang's close relationship with the Trump administration is also at the center of controversy.

With the inauguration of the second Trump administration in January last year, a change began in the policy stance of the former Joe Biden administration, which had strictly restricted China's access to American advanced AI semiconductors from a national security perspective.

CEO Hwang met with President Trump immediately after his inauguration and discussed AI policies with Elon Musk, and later attended President Trump's Mar-a-Lago fund-raising event with his wife, which had a participation fee of $1 million per person.

He has argued that selling American AI semiconductors to China actually slows down the development of China's own semiconductor industry and helps maintain America's technological edge.

Some advisers within the Trump administration also agreed with this logic.

CEO Hwang also accompanied President Trump on his trip to the Middle East in May last year, and the United States agreed to export Nvidia semiconductors to Gulf countries at the time.

A few weeks later, CEO Hwang and Nvidia's key lobbyists met with Deputy Secretary of State Christopher Landau in Washington and requested permission to export H20 semiconductors designed for the Chinese market.

A few days later, CEO Hwang met with President Trump, and the Trump administration allowed H20 exports on the condition that 15% of sales in China be paid to the U.S. Treasury.

This was a significant change in China's export control policy.

It is reported that there was a conflict of opinion within the administration during this process.

The WSJ reported that President Trump told aides ahead of his summit with Chinese President Xi Jinping in Korea in October last year that he was considering allowing Nvidia to sell next-generation AI semiconductors to China.

However, Secretary of State Marco Rubio and Commerce Secretary Howard Rutnick are said to have dissuaded this plan on the grounds that it was detrimental to national security.

◇ U.S. intelligence authorities do not hold ‘defense briefings’… Trump: 'I don't remember confidential memos'

Another issue in this case is the response of the U.S. intelligence community and the Trump administration.

Nvidia said that the U.S. intelligence authorities never gave CEO Hwang a so-called “defensive briefing,” warning him in advance about the possibility of being targeted by foreign intelligence agencies.

A defensive briefing is a procedure by which an intelligence agency informs personnel who may be the target of foreign espionage activities of the related risks and asks them to be careful.

Secretary of State Marco Rubio is said to have supervised the writing of a confidential memo ahead of President Trump's visit to China in May of this year, stating that CEO Hwang was having a personal relationship with a woman suspected of being a Chinese spy. The memo was shared with senior administration officials.

CEO Hwang was initially excluded from the list of businessmen accompanying President Trump on his trip to China, but later boarded the presidential plane Air Force One in Alaska and participated in the U.S.-China summit held in Beijing.

Regarding the memo, President Trump vaguely responded the previous day, saying that it was possible that intelligence officials had shown it to him, but that he did not remember seeing it. “It didn’t really have any effect on me,” he said.

President Trump said he spoke with CEO Hwang on the phone and that CEO Hwang explained to him that he did not know that the woman in question was a spy.

Even though a confidential memo was written on an issue that could affect national security and shared with senior administration officials, President Trump did not even clarify whether he had been briefed on it, raising questions about whether the administration's response was appropriate.

◇ NVIDIA executives contact the Vice Secretary of Commerce directly... Controversy over the fairness of the investigation

Separately, it was reported that NVIDIA and the U.S. Department of Commerce were contacted during the investigation into allegations of illegal leakage of Megaspeed's AI semiconductors, raising issues about the fairness of the investigation.

Last year, around the time the Trump administration allowed H20 semiconductors to be exported to China, Nvidia executives learned of the U.S. government's investigation into Megaspeed.

In response, Nvidia's legal director Tim Teter directly contacted Deputy Secretary Jeffrey Kessler, who heads the Commerce Department's Bureau of Industry and Security (BIS), which is responsible for export controls.

Afterwards, the Megaspeed investigation was led by the Justice Department, and the role of the Commerce Department was reduced.

WSJ reported that this was because Justice Department officials were concerned that Director Kessler's contact with NVIDIA may have undermined the fairness of the sensitive investigation.

However, NVIDIA explained that it was a routine procedure to identify regulatory risk factors during new sales or support to customers.

The Department of Commerce also announced that all investigations will be conducted in accordance with regulations.

An Nvidia spokesperson said the company had banned all sales and shipments of MegaSpeeds since June of last year, a measure that remains in place today.

However, it was explained that even after that, the parts and replacement parts supplied to Megaspeed received permission from the export control agency under the Ministry of Commerce.

◇ The U.S. Congress requests a private briefing from Jensen Huang... Movement to strengthen export controls on AI chips to China

The ripple effect of this incident is spreading through the U.S. Congress's movement to find out the truth and discussions on strengthening semiconductor export controls to China.

Three Republican chairmen of the House Foreign Affairs Committee, the Intelligence Committee, and the U.S.-China Strategic Competition Special Committee requested that CEO Hwang attend a closed-door joint briefing on the 18th and explain Nvidia's relationship with Alice Hwang and Nvidia's response to the espionage activities of foreign intelligence agencies.

Democratic House Minority Leader Hakeem Jeffries also expressed his determination to thoroughly investigate the truth at the congressional level.

There are voices from both the Republican and Democratic parties calling for the passage of a bill strengthening export controls for cutting-edge AI semiconductors.

As this incident, triggered by CEO Hwang's scandal, spreads to U.S. national security, semiconductor export policy to China, the Trump administration's response, and Congressional legislative issues, controversy is expected to continue for a considerable period of time as a major issue that will affect the future U.S.-China competition for technological hegemony.