Nvidia boss Jensen Huang's affair with an alleged Chinese spy is just the most visible part of the problem: Beijing is using every means to gain access to the company's AI chips. Researchers close to the military have long since achieved this.
America demands clarification: Did China manage to influence long-time Nvidia boss Jensen Huang and, through him, the US government with the help of an agent? Was the communist country able to get high-performance chips that were supposed to be taboo for China? Recent media reports indicate that alleged agent Alice Huang was at the center of an extensive corporate network through which Nvidia chips were successfully smuggled into China. Not only is the FBI investigating, Congress has also gotten involved and, among other things, subpoenaed the former Nvidia boss.
But the alleged espionage operation against the Nvidia boss is probably only part of a much larger campaign by China to obtain his company's banned technology. It continues to run successfully in secret, even away from Huang and his affair. China smuggles Nvidia chips on a large scale through various front companies or procures them through unsanctioned suppliers. All attempts by Washington to block these routes have so far been unsuccessful.
For example, as Reuters reports, a Chinese university with close ties to the military bought several of Nvidia's AI chips just last month despite being on Washington's blacklist. According to its website, the Northwest China Polytechnic University (NPU) in Xi'an purchased two H200 GPUs. This apparently succeeded, even though the export of these special graphics chips for AI training to China is prohibited for certain recipients according to US regulations.
Although H200 is not the newest, it is still a very powerful Nvidia chip. At the urging of Jensen Huang, Donald Trump approved the sale to China in January after examining individual cases: Huang had argued that it would be better to make China dependent on US technology and secure Washington's lead in the AI race than to continue to completely block exports, as was the case under Trump's predecessor Joe Biden. In addition, the Trump administration now collects 25 percent of H200 sales to China as an export fee.
Nevertheless, even under Trump's new weakened export rules, the NPU should never have received these processors. The university is considered an elite institution and specializes in aerospace and naval engineering. She researches missiles, satellites and aircraft for China's military and has been on the US sanctions list since 2001. It is one of the so-called "Seven Sons of National Defense" - the leading Chinese universities that devote much of their budget to military research and from which China's weapons companies mainly recruit their staff, even though they are officially civilian institutions outside the military.
The NPU is said not to have bought the Nvidia chips directly, but rather through a little-known supplier company whose contact details Reuters was unable to find. Other Chinese institutions are also doing this: In September, Shenzhen University purchased three H100 processors from Nvidia. Wuhan University of Technology purchased a server with an H100 chip and four A100 chips in June, and Beijing University of Aeronautics and Astronautics, another of the "Seven Sons," purchased four A800 processors in April. She also has close ties to China's military and researches combat aircraft.
In order to harness the computing power of the most modern AI chips, China's military may have found another back door without bringing the processors into the country. In the wake of the Jensen Huang espionage scandal, Chinese AI companies have apparently increased their efforts to rent Nvidia computing power outside of China, according to Reuters - out of concern that export controls could be tightened in the wake of the scandal.
A large cloud provider in China has therefore examined how it can secure chip capacity abroad. Other companies are said to have contacted data centers outside the People's Republic in order to reserve service as a precautionary measure. The concern is not unfounded: Democrats and Republicans in Congress are calling for stricter export rules after the spy scandal was uncovered. Jensen Huang has agreed to answer questions from MPs behind closed doors about his affair and his relationship with the alleged Chinese agent. Whatever findings the survey brings, the US government will probably be unable to prevent the constant, discreet infiltration of Nvidia's AI chips into China in the future.
