The revelation that Nvidia CEO Jensen Huang had an affair with a former executive of a Singapore-based company has raised concerns about China’s ability to acquire advanced microchips restricted from the country.
Jensen Huang has admitted to having an affair with Alice Huang, a Chinese businesswoman who later became the controlling shareholder of Singapore-based cloud-computing company Megaspeed International.
The New York Times reported last month that U.S. authorities had concluded she was a Chinese intelligence asset who passed information to Beijing while developing a close relationship with the Nvidia CEO — accusations that China’s Foreign Ministry has called “groundless.”
Megaspeed has also drawn scrutiny from U.S. authorities over suspicions that it helped Chinese companies obtain advanced Nvidia chips, subject to Washington’s export restrictions.
Meanwhile, the scandal has put the effectiveness of the U.S. restrictions on these advanced chips to China under a spotlight.
Here’s a look at why China needs these top-tier chips, why the U.S. has banned them from export, and how China is still able to acquire them.
Why would China want Nvidia’s chips?
Nvidia designs the world’s most powerful AI chips, which are considered the gold standard, analysts say.
“Their chips are at the forefront of the AI revolution,” said Ryan Ellis, an associate professor at Northeastern University in Boston, whose research focuses on communication law and policy, infrastructure politics and cybersecurity.
Artificial intelligence takes a huge amount of graphics processing (GPU) capacity, added Dennis Wilder, a former senior U.S. intelligence officer and National Security Council director for China.
High-end chips, like those offered by Nvidia, provide a cheaper means of developing AI, without having to create more data centres to create more GPU capacity, Wilder said.
They also support the most advanced AI models, Ellis said, meaning a lack of access to those chips hampers development.
“Inside China, there is an incredible hunger and thirst for these chips,” he said. “There’s a thriving black market for the most advanced video chips in China.”
Why did the U.S. block sales of these chips to China?
In October 2022, under the Biden administration, the U.S. Department of Commerce implemented export controls on advanced computing chips going to China. That means Nvidia’s top-end chips, Blackwell Ultra and Vera Rubin — both GPUs used for AI models, are blocked from being sold to the country.
The U.S. government has two main reasons for blocking these sales: To maintain the country’s global lead in AI development and to protect national security.
Whoever is winning the AI race — and able to train the best models — has the ability to be in the driver’s seat for this next era of the AI revolution, said Chris Mattmann, who was the inaugural chief data and AI officer at the University of California, Los Angeles (UCLA).
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 is still ahead of China, that gap is closing, Mattmann said. And anything that might “move the needle,” like access to advanced chips, helps close that gap, he said.
The U.S. government is also trying to preserve national security, with concerns that allowing China access to such chips could help advance its military technology, potentially allowing the development of systems that might one day threaten U.S. interests.
“Export controls are always … trying to both allow a market to grow, but also to shape that market in such a way that it doesn’t undermine national security,” said Ellis.
U.S. President Donald Trump, however, has eased up on some restrictions, and now allows other Nvidia chips that were initially blocked — typically those used in consumer electronics — to be sold to China under certain conditions.
So how is China getting Nvidia chips?
Soon after advanced chip restrictions to China were implemented, an illegal smuggling and underground network was set up by many vendors to get the chips into China and sell them on to companies there, Germany’s Deutsche Welle (DW) news agency reported.
The U.S. has cracked down on those vendors, where possible. In December 2025, the Department of Justice announced two Chinese men were in custody for allegedly smuggling Nvidia chips to 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)
But there’s also a legal loophole that can be exploited to send chips to China.
While Nvidia can’t sell their most advanced chips directly to China or China-based companies, they can sell them to other countries, and third-party data centres can then rent out access to those data centres to companies affiliated with 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.’
For example, Nvidia could sell the chips to a Malaysian company that then turns around and rents that computing power to a Chinese company, Ellis said, and “that would be above board.”
While some U.S. lawmakers believe this loophole should be closed, others believe it is a reasonable accommodation, Ellis said.
But, Ellis said, the current scandal suggests that what’s often happening is that these chips are being sold to these other countries, where they are then moved straight into China.
Are the controls truly effective?
According to Ellis, U.S. export controls are “never going to be 100 per cent perfect.”
But there could certainly be more spot checks and more aggressive oversight to make sure the purchasers of these chips remain the end users, he said. “The enforcement is missing.”
The U.S. Commerce Department’s enforcement arm, the Bureau of Industry and Security, is just not staffed well enough to enforce the restrictions, Wilder agreed.
For example, Reuters reported that China’s Northwestern Polytechnical University purchased Nvidia H200 chips last month, according to records. The news agency also found that other Chinese universities have bought Nvidia chips barred from export, including several institutions that had close links to China’s defence industry or military research.
A spike in AI agents operating outside human instruction has prompted Washington to propose an emergency hotline with Beijing. Andrew Chang breaks down why the U.S. is opting to keep an open line on AI despite a longstanding rivalry and distrust.
Images provided by The Canadian Press, Reuters, Adobe Stock and Getty
The controls have also raised questions as to whether they are achieving the intended effect of slowing Chinese development.
Since the U.S. in 2019 excluded Huawei — and later China — from buying some of the world’s most powerful computer chips and chipmaking machinery, Chinese semiconductor makers have rushed to become self-sufficient, developing their own chips and know-how.
Jensen Huang himself, who has advocated for looser export controls on China, has argued that continued U.S. sales to China would preserve American technological leadership and keep Chinese customers reliant on U.S. technology.
“We have to, No. 1, make sure that we have national security and that we protect our nation, but we also simultaneously should go and compete, and grow our technology industry and maximize our exports,” the Nvidia CEO told The Associated Press in June.
