The news that Nvidia’s CEO, Jensen Huang, engaged in an affair with a former executive from a Singaporean firm has sparked worries regarding China’s access to advanced microchips that are currently restricted from the nation.
Huang has confirmed his relationship with Alice Huang, a Chinese entrepreneur who subsequently became the majority owner of Megaspeed International, a cloud-computing company based in Singapore.
According to a report by The New York Times, U.S. officials have determined that she was an asset for Chinese intelligence, relaying information to Beijing while cultivating a close association with the Nvidia CEO—claims that the Chinese Foreign Ministry has dismissed as “baseless.”
Megaspeed has also been investigated by U.S. authorities due to suspicions that it facilitated the acquisition of cutting-edge Nvidia chips by Chinese firms, which are subject to Washington’s export prohibitions.
The ongoing scandal has brought the effectiveness of U.S. restrictions on advanced chips to China into question.
This article explores the reasons behind China’s demand for these high-end chips, why the U.S. has prohibited their export, and how China continues to obtain them.
What drives China’s interest in Nvidia’s chips?
Nvidia produces the most powerful AI chips globally, which analysts regard as the benchmark for excellence.
“Their chips are leading the way in the AI revolution,” noted Ryan Ellis, an associate professor at Northeastern University in Boston, specializing in communication law, infrastructure politics, and cybersecurity.
According to Dennis Wilder, a former senior U.S. intelligence official and director for China at the National Security Council, artificial intelligence requires significant graphics processing unit (GPU) capacity.
High-performance chips, such as those from Nvidia, offer a cost-effective solution for developing AI without necessitating the construction of additional data centers to increase GPU capacity, Wilder explained.
Moreover, these chips enable the most sophisticated AI models, meaning restricted access hampers innovation, Ellis added. “There is an enormous demand for these chips within China,” he stated. “A flourishing black market exists for these advanced video chips in the country.”
Why has the U.S. prohibited chip sales to China?
In October 2022, during the Biden administration, the U.S. Department of Commerce enacted export controls on advanced computing chips destined for China. As a result, Nvidia’s premium chips, Blackwell Ultra and Vera Rubin—both GPUs utilized for AI applications—are prohibited from being sold to the country.
The U.S. government has two primary motives for these sales prohibitions: to maintain its global leadership in AI advancement and to safeguard national security.
The entity that excels in the AI competition and can train superior models will be poised to dominate this forthcoming phase of the AI transformation, asserted Chris Mattmann, the first chief data and AI officer at 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. still holds an advantage over China, that gap is narrowing, according to Mattmann. Any development that could “shift the balance,” such as access to advanced chips, contributes to closing that divide, he remarked.
Moreover, the U.S. government aims to protect national security, with fears that providing China with such chips could enhance its military capabilities, potentially leading to the creation of systems that could pose future threats to U.S. interests.
“Export controls are always trying to allow market growth while simultaneously shaping that market to prevent national security risks,” Ellis noted.
However, U.S. President Donald Trump has relaxed some restrictions, now permitting the sale of certain Nvidia chips initially blocked—mainly those meant for consumer electronics—to China under specified conditions.
How is China acquiring Nvidia chips?
After the implementation of advanced chip restrictions for China, many vendors established an illegal smuggling and underground network to transport these chips into the country and sell them to local firms, as reported by Germany’s Deutsche Welle (DW) news agency.
The U.S. has made efforts to crack down on these vendors whenever possible. In December 2025, the Department of Justice announced that two Chinese individuals were apprehended 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)
However, there exists a legal loophole that can be utilized to send chips to China.
Although Nvidia cannot directly sell its most advanced chips to China or its companies, it can sell those chips to other nations, and third-party data centers can then lease access to these facilities to companies associated 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 instance, Nvidia might sell the chips to a Malaysian firm, which then rents that computing capability to a Chinese company, Ellis noted, indicating that “this would be legitimate.”
While some U.S. lawmakers feel this loophole should be closed, others consider it a reasonable arrangement, Ellis commented.
Nevertheless, Ellis pointed out that the existing scandal implies that these chips are frequently sold to other nations, only to be sent directly to China.
Are the controls genuinely effective?
According to Ellis, U.S. export controls will “never be completely foolproof.”
However, he suggested that more inspections and stricter oversight are necessary to ensure that the buyers of these chips are the ultimate users, stating, “The enforcement is lacking.”
The Bureau of Industry and Security, the enforcement branch of the U.S. Commerce Department, is inadequately staffed to uphold the restrictions, Wilder concurred.
For instance, Reuters reported that Northwestern Polytechnical University in China purchased Nvidia H200 chips last month, as indicated by official records. The same report revealed that other Chinese universities had acquired Nvidia chips that were restricted for export, including several institutions closely connected to China’s defense sector or military research.
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The export restrictions have also led to questions about their effectiveness in hindering Chinese advancements.
Since the U.S. prohibited Huawei—and subsequently China—from purchasing some of the most advanced computer chips and manufacturing equipment in 2019, Chinese semiconductor manufacturers have rushed to achieve self-sufficiency by developing their own chips and expertise.
Jensen Huang, who has advocated for relaxed export regulations regarding China, contends that ongoing U.S. sales to China would help maintain American technological supremacy and ensure that Chinese clients remain dependent on U.S. innovations.
“We must guarantee national security and protect our nation, but we should also compete, expand our technology sector, and maximize our exports,” the Nvidia CEO stated to The Associated Press in June.