Nvidia’s chip advantage made its CEO a target for China

Jensen Huang could hardly have imagined in 1993, when he met with a couple of friends at a Denny’s restaurant in the heart of Silicon Valley to discuss ways of improving video games, that he would one day become an influential billionaire caught up in one of the biggest espionage scandals in decades.A case that emerged this week has shaken the foundations of the artificial intelligence industry, highlighting the diplomatic tensions between China and the United States and underscoring Nvidia’s near-monopoly in the global technology sector.The company founded shortly after that meeting at the popular restaurant in Santa Clara, California, whose signature dish is a T-bone steak served with potatoes and eggs, announced this week that it has opened an investigation into Jensen Huang’s extramarital relationship with Alice Huang, a businesswoman of Chinese origin (who is not related to the Nvidia founder despite sharing his surname) who allegedly worked as a spy for Beijing. The two had maintained an intimate relationship for the past couple of years and were first seen together at a bar in Taipei in mid-2024.The woman, also known as Huang Le, is accused of passing information to Chinese authorities about U.S. policy on artificial intelligence and about the inner workings of Nvidia’s business operations, according to U.S. intelligence services. In a statement released this week, the company said it had “no reason to believe that either national security or Nvidia secrets were compromised.”Nvidia is the world’s largest manufacturer of microprocessors. According to a study by Silicon Analyst, it controls between 80% and 90% of the market for AI accelerators by revenue, generating more than $100 billion a year from the GPUs used in data-center servers.To understand why the Chinese government allegedly used an operative to approach Nvidia’s chief executive, it is necessary to understand the importance of the company’s semiconductors.When Jensen Huang, who would later become a global celebrity with a devoted following, and his friends decided to develop chips for graphics cards to improve the gaming experience, they unwittingly designed the electronic circuits known as GPUs. These processors are uniquely suited to handling massive amounts of data, making them ideal for training and running artificial intelligence algorithms with heavy computational workloads.Nvidia enjoys a strategic advantage over the rest of the industry. Whereas central processing units (CPUs), the chips commonly found in computers, smartphones and other electronic devices, are optimized to handle a relatively small number of highly complex tasks, GPUs are better suited to performing large numbers of simpler calculations simultaneously.Nvidia designs and develops both those silicon chips, which in some ways resemble a neural network, and the software that controls them, giving the company an almost monopolistic position in the AI industry. No rival has managed to match the reliability and performance of Nvidia’s products. The sector’s biggest players, including OpenAI, Anthropic, Google, Meta and Amazon, rely on those chips to power the data centers where they train their AI models.GPU semiconductorsAmid the industry’s AI race, demand for chips has surged. A single cutting-edge Nvidia semiconductor from the Rubin or Blackwell Ultra families costs close to $60,000, according to estimates by Morgan Stanley.The company, with a market capitalization of more than $4 trillion, making it the world’s second most valuable corporation after Apple, sells around seven million chips across its product lines, according to industry sources, as Nvidia does not disclose exact figures.The biggest players in tech are competing for the favor of Jensen Huang, who looks more like a Hollywood star than a semiconductor executive, complete with a tattoo of Nvidia’s logo on his left shoulder and his trademark black leather jacket. They court him in the hope of securing as many chips as possible as competition in the AI industry grows ever more intense.The fierce race to dominate the AI industry has heightened tensions between the United States and China, which is unable to obtain Nvidia’s most advanced processors. In 2022, Democratic president Joe Biden imposed export controls barring the sale of certain advanced technology products to China in an effort to preserve the United States’ lead in the sector.U.S. officials began investigating Huang Le about a year ago amid suspicions that her company, Megaspeed, was being used as a front to smuggle Nvidia’s highly sought-after chips into China.According to The New York Times, U.S. President Donald Trump was informed shortly afterward that the Chinese businesswoman had ties to a high-profile U.S. citizen, whose identity has not been disclosed, and who allegedly had access to sensitive information about artificial intelligence. “I’d have to check,” the Republican president said Monday when reporters asked whether he remembered the intelligence briefing. “I’d certainly check with the intelligence people. It could have been mentioned. Certainly, it didn’t make much of an impact on me,” he added, without providing further details.Around the same time, Huang stepped up his lobbying of the president to ease restrictions on chip exports to China. He wanted the White House to allow Nvidia to sell the semiconductors used to train AI models to Chinese companies. Just before Trump’s trip to Beijing to meet Chinese leader Xi Jinping, the U.S. president came close to granting Huang’s request, only to reverse course after a warning from Secretary of State Marco Rubio.Even so, two months later Washington relaxed the restrictions, allowing Nvidia to sell a specific version of its H20 chips to a select group of Chinese companies in exchange for 25% of the resulting revenue and for China to lift its ban on exports of rare earths, which are critical to the technology sector. The episode has fueled concerns about Huang’s influence over the decision.Months later, this spring, intelligence agencies produced a classified report that brought together the various suspicions surrounding the case. The document, overseen personally by Secretary Rubio, confirmed Huang’s relationship with the Chinese businesswoman, whose objective was allegedly to obtain information about advanced AI chips and influence their large-scale distribution in China.The report was circulated confidentially among senior White House officials. Asked on Monday whether he was aware of the allegations involving Huang, Trump sought to distance himself from the matter.“We’ll look into it, I know the FBI is looking into it in terms of something else, and I think that he’ll be in good shape,” the president said, after acknowledging that he had spoken with Huang, who told him he had no idea the woman was allegedly a spy.Beijing’s interest in obtaining Nvidia’s highly sought-after chips stems from its determination not to fall behind in the AI race. At the same time, the company sits at the center of broader geopolitical tensions.Jensen Huang was born in Taiwan 63 years ago but grew up in Oregon. When he founded Nvidia, he decided to base manufacturing in Taiwan through a privileged partnership with TSMC, the world’s largest chipmaker. Nvidia designs its chip architecture and software at its headquarters in Santa Clara, then sends the designs to be manufactured at TSMC’s facilities in the Hsinchu Science Park, near Taipei. The arrangement has created a complex corporate relationship linking U.S. interests with Taiwan’s semiconductor industry, a source of concern for Beijing. The revelations about Huang’s relationship with an alleged Chinese spy have therefore added a new layer of tension to an already sensitive geopolitical landscape.Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition