NVIDIA CEO Jensen Huang has admitted to having an extramarital affair, reportedly with a Chinese executive at a Singapore-based company, which the United States suspects of smuggling artificial intelligence chips to China.
The scandal highlighted how China, a major power in the field of artificial intelligence in its own right, obtained advanced chips, despite US restrictions on exports.
Why are Nvidia chips so important?
NVIDIA designs advanced components that were originally developed to process 3D graphics in video games, and are known as graphics processing units (GPU).
These units are distinguished by their ability to process huge amounts of digital data, and therefore they are also widely used in training and operating artificial intelligence systems, according to a report by Agence France-Presse.
The launch of “GBT Chat” in 2022 demonstrated the potential of artificial intelligence, which ignited a feverish investment race, with governments and giant technology companies racing to develop this technology.
With the influx of orders for chips, Nvidia's market value rose to $4.5 trillion, making it now, along with Apple, the two most valuable companies in the world.
What chips does the United States impose export restrictions on?
Washington bans the export of Nvidia's most advanced graphics processing units, Blackwell and Rubin, to China, citing security concerns, given the potential military uses of advanced artificial intelligence. This policy also allows the leading American laboratories in the field of artificial intelligence to maintain their global superiority.
Huang intensified his pressure on the US government to allow the sale of NVIDIA chips to China, warning that the imposed restrictions promote the rise of competing local alternatives.
During the current year, Washington eased restrictions on the less powerful “H200” chip, which was previously banned, with the United States receiving 25 percent of its sales revenues, but American conditions made approving shipments of these chips difficult, while reports indicated that Beijing was also reluctant to purchase “H200” chips, with the local chip industry gaining increasing momentum.
How does China get the chips?
Recent launches of high-performance models from Chinese startups, including Moonshot AI, Z.ai and DeepSeek, have increased pressure on American competitors.
Lian Jae Su, chief analyst at Omdia, told Agence France-Presse: “Chinese suppliers are still using advanced (Nvidia) chips to train their models,” despite the restrictions imposed.
The chips may be smuggled into China, or Chinese companies may obtain them through a loophole that allows them to rent computing capacity in data centers equipped with Nvidia chips in a third country, often in Southeast Asia.
“US export controls impose restrictions on where the chip is shipped to, not who uses it,” explained Stephen Wu, founder of the Carthage Capital investment fund. This means that Nvidia's GPUs could be located in the Malaysian region of Johor, for example, "in full compliance with the rules, while a customer in Shenzhen logs in," according to Wu.
White House advisor Michael Kratsios said this summer that Moonshot AI had access to advanced chips from Nvidia in Thailand. Washington also accused Chinese artificial intelligence laboratories of training their systems to mimic the capabilities of American models.
The Information technology platform said in December that DeepSec developed its new model using thousands of chips that were dismantled abroad and transported to China.
Deep Sec did not respond at that time to a request for comment. As for Nvidia, it told The Information that it had not seen evidence of these smuggling operations, and described it as “highly unlikely.”
What about Chinese chips?
“NVIDIA chips still make advanced AI work faster and easier, but they are no longer the only way,” said Bo Zhao, founder of analytics platform Hello China Tech.
He added, "The open question is the cost," as "training using Chinese chips usually takes longer and requires greater engineering effort."
Huawei is the most prominent Chinese competitor to NVIDIA, despite its lag behind the giant American company. It was reported that DeepSec will train its next main model using Huawei chips.
“Chips manufactured in China are improving rapidly,” Su said, anticipating more cooperation in this field.
Huawei announced in September that its new artificial intelligence chip would be ready in the first quarter of 2027, that is, three quarters earlier than planned.
Wu said that enhancing the capabilities of chips manufactured in China requires artificial intelligence companies to use larger numbers of them. He added: “They are paying for this in energy consumption and cost, but they are able to afford it, because electricity in China is cheap, and because the chips have government support.”
US President Donald Trump said on Monday that the Federal Bureau of Investigation (FBI) is looking into a relationship linking Nvidia CEO Jensen Huang to a person alleged to be a spy working for China.
However, Trump indicated that he did not believe Huang had anything to worry about.
According to the Associated Press, Trump said during a press briefing at the White House: “I know the FBI is looking at the matter in a different context, and I think his situation will be good.”
The sudden revelation of Huang's romantic relationship with this woman caused shock in political circles and the American technology sector, raising new concerns about the possibility of China's access to advanced electronic chips designed by NVIDIA, which are the main engine for the development of artificial intelligence.
Trump has a friendly relationship with Huang.
The US President said, during the press briefing yesterday: “I spoke with Huang today to check on him and his conditions. He assured me that he had no idea that the woman in question was a spy.”
Huang, a prominent figure in the world of technology and one of the richest individuals in the world, acknowledged the existence of this relationship, offering an apology to his wife and to the company through an open letter published on Nvidia’s website.
“I support the investigation and will cooperate fully,” Huang’s letter said. “I love our country and our company, and I am committed to protecting NVIDIA and supporting America’s national security.”
On Sunday, Nvidia announced that it was conducting an independent investigation into reports that Huang was “the target of a foreign intelligence operation.”
The New York Times reported that US intelligence concluded that the woman was collecting information for Beijing. She indicated that her name is Alice Huang, and she ran a company that last year was accused of illegally shipping advanced computer chips produced by NVIDIA to China.
The repercussions of the case extended to the US Congress, as two senior Democrats, Senator Mark Warner and Representative Hakeem Jeffries, stated on Monday that they intended to conduct a broader investigation into the matter.
Jeffries explained that the issue was raised during a closed session with the Director of the Central Intelligence Agency (CIA) and the Director of National Intelligence, which was primarily dedicated to discussing the Iranian issue.
On the other hand, China denied any involvement in the attempt to target the company’s president, and Chinese Foreign Ministry spokesman Guo Jiaqun described the accusations as “unfounded and nothing but slander against China.”
Trump is scheduled to meet with Chinese leader Xi Jinping next week in the Chinese city of Shenzhen, on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit, but Trump did not show a clear commitment to raising this issue during the meeting.
“I don't think so,” Trump said. But I'm sure President Xi will ask me about it. “I know Jensen Huang well, and I think he is a very honorable man.”
Huang helped convince Trump to adopt a more flexible approach to regulating artificial intelligence, arguing that existing laws are sufficient to address any security concerns that may arise from this technology, and that companies themselves must act responsibly with regard to the products they develop and put on the market.
He also succeeded in obtaining Trump's approval this year to sell H200 chips to the Chinese market. However, it is still unclear whether Beijing will allow Chinese companies to purchase these chips in large quantities.
In a regulatory document submitted in August, Nvidia stated that it sold only a limited amount to China, given that these sales are subject to restrictions imposed by the Chinese government.
