Good morning. It’s good to be back. Have you been following the Nvidia news? It sounds like a Ken Follett novel. Chips down Imagine this for a moment: An alleged Chinese spy seduces the leader of the world’s second-biggest company in order to help her country beat the U.S. in a contest to master the future’s most important technology. The president of the United States is aware of the relationship. I’d read that thriller on a long-haul flight, absolutely. Except U.S. intelligence officials say it’s not a fiction. Over the weekend, Jensen Huang, the chief executive of Nvidia, the company that dominates the market for A.I. computer chips, admitted that he had an affair with a Chinese businesswoman, Alice Huang, who U.S. spy agencies said was a cutout for Beijing. (They’re not related. This isn’t a George R.R. Martin novel.) The company’s board is investigating the affair. It said it had "no reason to believe that either national security or Nvidia secrets were compromised," and that its chief executive would remain chief executive during the review. Yesterday, Beijing called the allegations "nothing but a smear against China."
There’s more to all this than romantic scandal and corporate espionage. The United States and China are in a race to control the future of artificial intelligence. Nvidia makes the chips that have for now put the United States ahead. To keep it that way, Washington bars Nvidia from selling chips to China. Enter Alice Huang, a Chinese citizen who is an executive at a Singapore-based data-center company called Megaspeed. It’s unclear when she first met Huang from Nvidia, but in 2024 they were photographed together at a bar in Taipei as Megaspeed prepared to spend $2 billion on Nvidia chips. Investigators from the U.S. Commerce Department were interested in that: Was Megaspeed helping China sidestep American export restrictions? Whom did she really work for? (Alice Huang has not responded to multiple attempts to reach her for comment in recent days.) U.S. officials concluded she was recruited by China’s Ministry of State Security to gather information on the American C.E.O. and potentially to influence his company to funnel chips to China. That’s not how America wins the global competition for dominance of A.I.
The markets sure didn’t like it. Huang doesn’t sit on top of a pyramid at Nvidia. He has 60 executives reporting directly to him. Should the board decide to punish him, there’s no obvious candidate to take his place. That has consequences. Until recently, Nvidia was the most valuable publicly traded company in the world. On Monday, its stock fell more than 4 percent, erasing hundreds of billions of dollars in market value. There could be political fallout as well. Huang is a close ally of President Trump. He is also friendly with the Chinese, whom he told Bloomberg are "not our enemies." Last year, he persuaded the president to roll back some of the ban on chip sales to China, after which Nvidia sold its second-most valuable chip there. (The U.S. government took a 25 percent cut of the sales.) And Nvidia has given at least $20 million to Trump’s ballroom fund.
Nvidia’s board will investigate, though as my colleagues report, Huang’s grip on the company is so firm that it will be a challenge to discipline him. The board itself is thick with early investors and business partners. Those are long, financially fruitful relationships. The Republican leaders of three House committees have asked Huang to brief them in private this month. The Justice Department took over a federal investigation into Megaspeed after Commerce Department investigators working on the case received an email from Nvidia’s general counsel seeking information about the inquiry and saying that a top official at the department had given the company permission to reach out. Trump, at the moment, appears sanguine. He told reporters yesterday that he had asked Huang if he knew the woman he was seeing was a spy. "He said, ..."
Source: New York Times Top Stories · Summarized by HeadlinesBriefing