Downfall of world’s chipmaker-in-chief a potential headache for Beijing as well as US

Beijing: We will probably never know if Jensen Huang’s swagger, connections and status as the world’s chipmaker-in-chief would have been enough to save him from the blast radius of an affair with an alleged spy.

The emergence of a second extramarital affair looks poised to sink the Nvidia boss.

The company is reportedly preparing to cut him loose. It would be an act of almost self-decapitation. Huang built Nvidia from the ground up over three decades into one of the world’s most valuable companies, through which he commanded enormous influence over the unfolding tech revolution and frenzied race between the US and China.

Inside Nvidia, he concentrated power in his leadership with 60 executives reporting directly to him.

There is no succession plan.

His apparent downfall leaves a question mark not just over Nvidia’s future direction, but US chip policy more broadly.

In Washington, Huang has been a forceful lobbyist for giving China access to some less-advanced Nvidia chips, arguing that keeping Beijing hooked on US technology would slow the development of its own high-powered domestic chip industry.

National security hawks loathed the deal he cut with US President Donald Trump last year to sell Nvidia’s powerful H200 chips to China in exchange for the US government taking a 25 per cent cut. They would toast his defenestration.

In Beijing, too, some would rue the departure of a tech titan whose corporate interests in making the world dependent on Nvidia aligned with their own.

“Although we compete against China, they are not our enemies,” Huang told Bloomberg in a recent interview where he criticised US chip restrictions.

Would Nvidia’s next chief executive take the same line?

Either way, ousting Huang will not stem the tide of scrutiny coming Nvidia’s way. The company faces multiple investigations into whether its chief’s affair has exposed it to a foreign intelligence plot, and whether Nvidia did enough to stop its chips from allegedly being smuggled into China.

The spy scandal

For a spy scandal in the digital age, the plot is strikingly analogue.

A powerful tech billionaire with a direct line to the president has apparently been compromised, not by a sophisticated cyberespionage operation or a malevolent team of AI super-agents, but by the age-old trope of sleeping with the enemy.

For all the salacious speculation of a Beijing-orchestrated honeypot scandal, there are many missing details about the woman at the centre of it, Chinese data company executive Alice Huang (no relation).

The New York Times, which broke the initial story, reported that US agencies suspected she was recruited by China’s Ministry of State Security (MSS) and used her affair with Huang to funnel information back to Beijing.

Anonymous sources cited in media reports have not leaked what evidence the US gathered or the nature of Huang’s suspected ties to the MSS, and neither Nvidia nor its founder appear to have been told about them. But there were enough red flags in Alice Huang’s background for both to be more curious.

Do US authorities believe she was an MSS operative carrying out a calculated intelligence-gathering agenda, or a savvy businesswoman whose genuine closeness to Huang the agency sought to exploit?

Several China analysts think the latter is more likely.

More importantly, what did China potentially gain?

It’s hard to overstate Nvidia’s role as the American company at the apex of US-China tech rivalry, and the role of Jensen Huang as its founder in influencing artificial intelligence policy.

Nvidia’s advanced chips, which China cannot yet match, are key to the US maintaining its lead in AI and its edge across a range of fields, including high-tech weapons systems.

Needless to say, it is a huge coup for the MSS if it has cultivated an agent who was in close contact with the Nvidia chief.

“This is a counter-intelligence nightmare,” says Ryan Fedasiuk, a former US State Department official, now at the Foundation for American Innovation.

Two parts of Alice Huang’s role are under scrutiny. First, her business dealings as a former top executive at Megaspeed, a little-known Singapore-based data centre company that somehow amassed funds to buy $US4.8 billion ($7 billion) of Nvidia equipment, purportedly for its data centres in South-East Asia.

These third-country transfers are not illegal under US chip export controls, but US investigators are examining whether Megaspeed exploited them to smuggle restricted AI chips into China.

Fedasiuk says the affair has overshadowed what should be a focus on the actions Nvidia may have taken on behalf of Megaspeed, after it emerged that Nvidia’s general counsel sought to intervene in a US government probe into the Chinese company.

“This was the CEO of the largest company in the world having a covert relationship with his customer, and not only producing a potential conflict of interest in that, but actually using the conflict of interest in terms favourable to the customer,” Fedasiuk says.

“And unfortunately, that customer is alleged to be a Chinese intelligence asset on top of it all.”

As China analyst Bill Bishop speculated, a good relationship with Jensen Huang “likely meant more chips for the Megaspeed front company and the entities back in the PRC to which those chips flowed,” he posted on X.

Second, what kind of sensitive information could Alice Huang have been privy to, including via so-called “pillow talk”, that may now be in the hands of Chinese intelligence?

‘He’s China’s lifeline when it comes to artificial intelligence; Nvidia chips are really indispensable for China’s AI development.’

Alex Joske, managing director at Garnaut Global, a China-focused risk advisory firm.

Jensen Huang has had easy and frequent access to Trump. This continued after Trump was briefed about the suspected spy scandal twice, most recently in May while en route to his Beijing summit with Chinese President Xi Jinping. The Nvidia boss joined him on that summit.

Did Alice Huang seek to influence his lobbying efforts, or pass updates to Chinese intelligence? Did he confide in her confidential information about Nvidia’s corporate plans or even his conversations with Trump?

Some of these details may be shaken out in upcoming investigations, including when Jensen Huang is called before Congress to answer questions at a closed-door meeting later this month. The FBI is also investigating, while Nvidia has launched its own internal probe.

Under Xi, the MSS has risen in status, resourcing, and prowess and has prioritised artificial intelligence operations as it seeks to close in on the US’s lead, says Alex Joske, an analyst who specialises in Chinese influence operations.

“Jensen Huang ticks every box from the perspective of Chinese intelligence services,” says Joske, who is managing director at risk advisory firm Garnaut Global.

“He’s got top-level political access, and his company is at the heart of the most important technological feud in US-China competition.

“He’s China’s lifeline when it comes to artificial intelligence; Nvidia chips are really indispensable for China’s AI development.”

The Nvidia boss maintains he was unaware his lover was an alleged spy. We know this because he told Trump this week, who relayed it to reporters, proving the scandal hasn’t ended his direct access to the president.

The Chinese Foreign Ministry has dismissed the allegations as “totally unfounded” smears.

Beijing had been hoping it could ride out the remaining two years of Trump’s presidency on the uneasy detente both sides had secured.

But this explosion is poised to unite Democrats and Republicans angry at Nvidia’s influence and Trump’s softening on China in a campaign to further strangle Beijing’s access to backdoor chips.

It adds to swirling atmospherics at next week’s APEC summit, when Trump and Xi will meet for the third time this year. This time, though, don’t expect Jensen Huang to secure a seat on Air Force One.

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