Why is Nvidia’s Jensen Huang at the centre of a US-China row?

Huang has admitted to having an affair with a suspected Chinese spy who was reportedly central to the “foreign intelligence effort”.Here are some of the key questions around the story, and its implications for US-China relations.What has happened? Nvidia, the maker of the computer chips crucial to developing and operating AI systems such as ChatGPT, and its CEO are reportedly the target of a Chinese espionage sting.Nvidia has been selling its much sought-after chips to a little-known Singapore-based datacentre company, Megaspeed. US officials had been concerned that Megaspeed might have been helping Chinese firms bypass restrictions on chip exports to China, by diverting semiconductors to the US’s chief AI rival.Those concerns about Megaspeed were first reported last year but the story became explosive when the New York Times reported last month that a Megaspeed executive, Huang Le – a Chinese citizen also known as Alice Huang – had developed a “close relationship” with the Nvidia boss. There were worries in US intelligence that Ms Huang, no relation to the Nvidia boss, was in fact a Chinese intelligence asset funnelling information to Beijing.At the time Nvidia said its CEO’s interactions with the Megaspeed executive were “not unusual or unexpected” and the Singapore company had received “zero information relevant to national security”.Then Huang admitted on Sunday that he had been unfaithful to his wife.In a message to company employees released on Sunday, Nvidia’s co-founder said: “I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry.”It is unclear how long the pair have known each other, but they were photographed together drinking whisky in a bar in Taipei after a technology trade show in June 2024.Jensen Huang with Alice Huang in a bar in Taipei after a technology trade show in June 2024. Photograph: ReutersNvidia said it was “initiating an independent investigation in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort”.The statement added: “While the board has no reason to believe that either national security or Nvidia secrets were compromised, the board’s inquiry will examine all available information.”Jensen Huang said he supported the “investigation and will cooperate fully. I love our country and our company”.In a statement to the NYT last month, Megaspeed said its “current leadership” took the matter “extremely seriously and is committed to getting to the facts behind these allegations”. It added that “outside counsel has been retained to conduct a thorough internal investigation and has notified the US government that we are fully committed to cooperating”.Responding to reports last year that it might have diverted Nvidia deliveries, Megaspeed told Bloomberg: “Megaspeed is a Singapore-based company, operating fully in compliance with all applicable laws, including US export control regulations.”Alice Huang has not commented.Will this affect global stock markets?Nvidia is a pivotal company in the AI boom, its chips being analogous to the shovels used by prospectors in a gold rush. It is worth $4.5tn (£3.3tn) and any serious knock to its value could have ramifications for valuations of US tech stocks, not just Nvidia. US tech stocks have been enduring a shaky start to the month after the success of anti-datacentre candidates in last week’s midterm elections.“Nvidia is huge and at the heart of the AI supply chain, so what happens to this stock matters to the rest of the market. There is the potential for this story to knock sentiment, which is already pretty fragile,” said Neil Wilson, an analyst at the investment platform Saxo UK.Dan Ives, a US-based tech industry analyst, said the scandal would result in “multiple congressional inquiries” and weigh on Nvidia’s share price.“There is clearly risk that Jensen could be removed as CEO depending on the board investigation and this will add risk to the stock as he is so important to the Nvidia story and strategy globally,” he added.How has Donald Trump reacted?The US president was reportedly briefed on US intelligence concerns about Nvidia a year ago, according to the NYT, and did not act on the information. He has been wary of disrupting a leading US company and his country’s already difficult trade relationship with China.Trump said on Sunday he did not regret not acting on this intelligence. “No, I don’t think so. I think – you know, he’s an honourable guy. I think he probably has an excuse for it. You have to hear it.”Asked whether Huang would remain as CEO, Trump said: “I think so. Oh yeah, sure.”Some other prominent figures weighed in on Huang’s admission. The billionaire investor Bill Ackman, the founder of Pershing Square Capital Management, said on X that the Nvidia CEO was an “incredible human”, but if “indeed this is more than an affair, then it is obviously a real problem”.“I am hoping for a ​simple affair, not a risk to our national security,” he added.Elon Musk commented “I agree”, on a post by the Sequoia partner Shaun Maguire that said Huang “did something incredibly dumb” that was “bad for America” but that “Jensen is irreplaceable for America’s AI leadership“.Huang owns approximately 3.6% of Nvidia and is worth $155bn, according to the Bloomberg billionaire index, which puts him in the top 10 of the world’s richest people.Do the US and China have a difficult relationship over tech? The history of US-China tech relations is complex. US companies have long complained of industrial espionage, usually on the part of Chinese workers or academics with family in China, that makes them vulnerable to recruitment. The Center for Strategic and International Studies, a US thinktank, has tracked hundreds of instances of reported espionage, and says there are more than 1,200 lawsuits brought by US companies on the grounds of intellectual property theft.However, US tech companies have at times opened themselves to this. Apple, for example, heavily relies on partners in mainland China to manufacture its iPhones – often because they were willing to do so at far lower prices than overseas competitors. These partners have in turn made profits by also manufacturing phones for companies like Huawei.The situation at Nvidia may be raised next week, when Trump is expected to meet the Chinese president, Xi Jinping.Why did the US restrict chip exports?Under former US president Joe Biden, the US passed the Chips Act, a set of sweeping export controls designed to choke off China’s ability to make advanced semiconductors – the computer chips that underpin most modern technology. There were diverse motives behind this: a sense of growing discomfort around the US’s declining share of the global chip market, a mounting sense of geopolitical competition between the US and China, and rumblings that AI might become very important, meaning that control of computer chip supply chains would be of greater import.Under Trump, this policy became more focused around cutting deals than coherent export controls. Controversially, the president allowed the sale of H20s, an advanced Nvidia chip, to China – in return for a cut of the sales revenue.