The disclosure that Nvidia’s CEO, Jensen Huang, engaged in an affair with a former executive from a Singaporean firm has sparked worries regarding China’s capacity to obtain advanced microchips that are restricted from entering the country.
Huang has acknowledged his relationship with Alice Huang, a Chinese businesswoman who subsequently became the majority shareholder of Megaspeed International, a cloud-computing company based in Singapore.
A report from The New York Times last month indicated that U.S. officials determined she was acting as a Chinese intelligence operative, transmitting information to Beijing while fostering a close association with the Nvidia CEO — claims that the Chinese Foreign Ministry has dismissed as “unfounded.”
Megaspeed is under investigation by U.S. authorities due to suspicions that it assisted Chinese firms in obtaining advanced Nvidia chips, which are subject to Washington’s export limitations.
In the meantime, the controversy has highlighted the efficacy of U.S. export restrictions on advanced chips to China.
Below is an overview of why China seeks these high-end chips, the reasons behind the U.S. export ban, and the ways in which China continues to access them.
What motivates China to seek Nvidia’s chips?
Nvidia is recognized for creating the most powerful AI chips globally, regarded as the benchmark in the industry, according to analysts.
“Their chips are leading the AI revolution,” stated Ryan Ellis, an associate professor at Northeastern University in Boston, specializing in communication law, policy, infrastructure politics, and cybersecurity.
According to Dennis Wilder, a former senior U.S. intelligence officer and director for China at the National Security Council, artificial intelligence requires significant graphics processing unit (GPU) capacity.
High-performance chips, such as those produced by Nvidia, offer a more cost-effective solution for AI development by reducing the need for additional data centers to increase GPU capacity, Wilder noted.
These chips also enable the most sophisticated AI models, Ellis mentioned, indicating that a lack of access to them hinders technological advancement.
“There is an immense demand for these chips within China,” he remarked. “A robust black market exists for the most advanced video chips in the country.”
Why has the U.S. prohibited sales of these chips to China?
In October 2022, the U.S. Department of Commerce, under the Biden administration, instituted export controls on advanced computing chips destined for China. Consequently, Nvidia’s premier chips, Blackwell Ultra and Vera Rubin — both GPUs utilized for AI applications — are prohibited from being sold to the nation.
The U.S. government cites two primary concerns for these sales restrictions: maintaining its global leadership in AI development and safeguarding national security.
As Chris Mattmann, the first chief data and AI officer at UCLA, stated, whoever excels in the AI race and trains the best models will hold a significant advantage in the forthcoming era of AI innovation.
Nvidia shares dropped sharply after the U.S. tech giant launched an investigation into CEO Jensen Huang’s affair with a Chinese woman who U.S. intelligence agencies allege is a spy for Beijing.
While the U.S. maintains a lead over China, Mattmann noted that the gap is narrowing, and any factors that might “shift the balance,” such as access to advanced chips, contribute to closing that disparity.
Additionally, the U.S. government aims to ensure national security, as there are concerns that granting China access to such chips could enhance its military technology, potentially creating systems that may one day pose a threat to U.S. interests.
“Export controls are always trying to balance market growth while ensuring it doesn’t compromise national security,” Ellis stated.
However, former U.S. President Donald Trump has relaxed some restrictions, now permitting the sale of certain Nvidia chips previously blocked — usually those intended for consumer electronics — to China under specific conditions.
How is China acquiring Nvidia chips?
Shortly after the implementation of advanced chip restrictions for China, a network of illegal smuggling and underground vendors emerged to facilitate the entry of these chips into the country, as reported by Germany’s Deutsche Welle (DW) news agency.
The U.S. has been actively targeting these vendors where feasible. In December 2025, the Department of Justice announced the arrest of two Chinese individuals for allegedly smuggling Nvidia chips into China.
A screengrab from CTI video footage shows a woman identified by Reuters as Alice Huang, after comparison with a photograph obtained separately, attending a dinner with Nvidia CEO Jensen Huang at a restaurant in Taipei, Taiwan, on May 22, 2025. (Reuters)
Furthermore, there exists a legal loophole that allows for the transfer of chips to China.
While Nvidia is prohibited from directly selling its most advanced chips to China or its companies, it can sell to other nations, and third-party data centers can then lease access to that computing power to companies tied to China.
Nvidia is opening an investigation into its CEO, Jensen Huang, after he admitted to having an affair. The woman in question is accused of being a Chinese spy, having allegedly passed information to Beijing, according to a media report. New York Times reporter Julian E. Barnes, who broke the news of Huang’s relationship, says ‘there is a long way to go on this story.’
