Trump does not plan to confront Xi on the affair, officials say
The affair reported to involve former Nvidia CEO Jensen Huang and a suspected Chinese spy has landed at the center of the technology competition between Washington and Beijing. Democrats and Republicans in Congress are citing the episode to press for tighter limits on exports of advanced chips, and the reports have emerged as President Donald Trump prepares to meet Chinese President Xi Jinping in China next week.
At the heart of the competition to build the most advanced artificial intelligence is the race to access the most powerful AI chips — the hardware Nvidia dominates. U.S.-led restrictions have barred China from obtaining the world’s most advanced AI chips, a strategy that has led Beijing to accuse the United States of pursuing an AI monopoly. Nvidia once commanded some 95% of market share in China; its sales there have plummeted under export restrictions first applied during the Biden administration.
The affair merges strands of the rivalry that are usually handled separately, one analyst said. “The scandal, in many ways, encapsulates the rivalry, where concerns around national security, export control, and foreign policy get intertwined,” said Lian Jye Su, a chief analyst at the London-based technology research and advisory group Omdia.
Trump earlier this year approved exports to China of Nvidia’s H200 chips — highly advanced, though not the company’s most powerful — after Huang lobbied Washington to loosen the limits on sales. Trump has spoken admiringly of Huang, a man at the center of an AI boom the president has been keen to promote, and the two have talked regularly during Trump’s second term, including at least twice this week as the scandal grew.
Washington’s strategy has focused largely on hardware, said Shaoyu Yuan, an assistant professor at New York University’s Center for Global Affairs. Officials believed that if they controlled where California-based Nvidia’s best chips go, they would control the race for the most capable AI — an approach that slowed Chinese companies, Yuan said, but assumed the primary threat was the physical hardware rather than access to leaders like Huang. Yuan said “China hawks” in Congress, who have been bullish on oversight and stronger export controls since long before the affair, now have “a story with a name and a face” to support their argument. “I don’t think anybody in Washington wants to be seen as loosening the controls on chip exports to China right now,” he said.
This week, several congressional Democrats wrote to Commerce Secretary Howard Lutnick to ask what officials knew of Huang’s affair with a reported Chinese spy — and to demand an immediate halt to exports of advanced artificial intelligence chips to China.
Lawmakers from both parties have become more outspoken in calling for tougher legislation to prevent China from accessing advanced U.S. chip and AI technologies. The Senate version of a defense policy bill would authorize Congress to review licenses to sell advanced AI chips to China, authorize the Commerce Department to track AI chips to ensure they are not diverted to unauthorized regions, and compel U.S. allies to match U.S. restrictions on exports to Chinese chipmakers.
Beijing has warned the United States against using the episode as a reason to impose new restrictions. “The U.S. should stop fabricating the ‘Chinese spy’ narratives as a pretext for imposing technology restrictions,” Chinese Foreign Ministry spokesperson Mao Ning told reporters on Thursday.
The woman in the relationship with the Nvidia chief is reported to be Alice Huang, a former executive at the Singapore-based cloud computing company Megaspeed. The New York Times reported that U.S. officials suspect she was a Chinese spy recruited to potentially influence Nvidia to make its cutting-edge chips more available to China. Beijing has refuted the claim and called the allegation “unsubstantiated.”
Trump does not plan to confront Xi on the Nvidia issue, according to senior U.S. officials who briefed reporters Friday on the condition of anonymity under ground rules set by the White House. The officials also said they do not expect Chinese retaliation if Washington closes loopholes in existing measures that prohibit China from smuggling or using advanced computer chips.
Huang has been a frequent visitor to the White House. In May, he joined Trump aboard Air Force One in Alaska at the last minute for a state visit to Beijing, where he captivated locals by sampling street food. Huang and his wife, Lori, were seated at the head table with the two leaders when Trump hosted Xi in Washington in September, and at a tech summit that month Huang took a phone call from the president during a live appearance.
The affair also reaches a channel of cooperation the two governments have been building: the United States and China have committed to the idea of a hotline for AI national security-related incidents. Kyle Chan, a fellow at the Washington-based Brookings Institution, said the Nvidia scandal and the possibility of new U.S. export control measures could throw a wrench in the AI talks. “The question is whether Beijing can separate export controls from the AI safety discussion or will view them as connected issues,” Chan said.
The two countries have pushed AI forward in different ways. U.S. companies are chasing AI frontiers supported by cutting-edge chips and the country’s rapidly expanding data center infrastructure, while China is pursuing wider global adoption of its open-source, more affordable models. China is increasingly emerging as an AI counterweight to the United States and closing the gap in its lead, experts say, but Nvidia’s advanced chips remain crucial for many Chinese AI companies and research. Chinese chipmakers including Huawei have made rapid progress in working around U.S. restrictions, including by clustering large numbers of less advanced domestic chips, though Nvidia’s chips still lead in single-chip capability and outperform Chinese alternatives in training advanced AI models, analysts said.
China’s push for technological self-reliance may have contributed to a reluctance to buy larger amounts of American chips: despite the U.S. approval to sell some H200 chips to China, Nvidia said earlier this year it had shipped only a small amount to the country. Rui Ma, founder of Tech Buzz China and a China tech expert, said the Huang episode could ultimately add momentum to China’s domestic chip industry. “For Beijing, the fallout only adds urgency to its efforts to build a domestic semiconductor supply chain,” Ma said. “That was already a strategic priority, but if access to Nvidia computing power becomes even more restricted, Chinese companies will have increasingly few alternatives.”