“From Smuggled Nvidia Chips to Suspected Use of Spies”: The Other Side of China’s Semiconductor Self-Reliance Policy as Jensen Huang Controversy Opens New Phase in U.S.–China Technology Conflict

Suspected Chinese intelligence ties involving Jensen Huang’s affair partner prompt investigations by Nvidia and the U.S. Congress
China continues smuggling advanced Nvidia chips despite its semiconductor self-reliance push
Industrial and technological intelligence warfare expands as the West steps up vigilance against Chinese high-tech espionage

The controversy surrounding Nvidia CEO Jensen Huang has emerged as a new variable in the U.S.–China semiconductor conflict. As evidence of China’s indirect imports of Nvidia chips has steadily accumulated, analysts have also suggested that Chinese intelligence agencies sought to obtain technology and policy information through someone close to Huang. Market observers say that, if the allegations are substantiated, they could provide further evidence that China, despite pursuing semiconductor self-reliance, has yet to fully escape its dependence on advanced U.S. technologies and products.

Espionage Allegations Emerge Around Jensen Huang

According to a review of foreign media reports on the 9th (all dates hereafter are local time), the controversy over Huang’s extramarital relationship is expanding into an espionage dispute involving advanced semiconductor technology between the United States and China. The first reports emerged on the 29th of last month. At the time, The New York Times (NYT), citing U.S. intelligence officials, reported allegations that Alice Huang, a Chinese businesswoman, had maintained a close relationship with the CEO while passing information to the Chinese government. Alice Huang is a former executive at Singapore-based data center company Megaspeed International and has direct ties to a major Nvidia customer. Subsequently, on the 6th, further details emerged of a U.S. intelligence assessment that China’s Ministry of State Security (MSS) had recruited Alice Huang in an attempt to exert influence over Nvidia. The findings were reportedly included in an intelligence assessment circulated to senior U.S. administration officials.

U.S. authorities focused on the possibility that the personal relationship between Alice Huang and the CEO had been used as a channel for intelligence gathering. They believe the two were romantically involved and that Alice Huang may have sought to use the relationship to learn about the direction of U.S. government policy toward China. Allegations also emerged that Chinese intelligence agencies had used the relationship to influence Nvidia’s business decisions. Huang has publicly argued that sales of U.S.-made artificial intelligence (AI) chips should be permitted in the Chinese market. He urged the Donald Trump administration to ease restrictions, arguing that export controls could instead accelerate Chinese companies’ development of their own chips, and secured approval for sales of Nvidia’s H20 and H200 chips to China.

Investigations Gather Pace as China Issues Categorical Denial

As the controversy spread, Huang acknowledged the extramarital relationship in an email to Nvidia employees on the 8th, saying, “I was not faithful to my wife, and my actions hurt my wife and children.” Nvidia’s board announced the same day that it was launching an independent investigation with assistance from outside legal experts. The U.S. Congress also moved to establish the facts. According to Reuters, three Republican House committee chairs asked Huang to attend a closed-door briefing on the 18th to explain the matter. The aim is to investigate whether contacts between Nvidia executives and a person suspected of ties to Chinese intelligence agencies may have affected U.S. national security.

The Chinese government, by contrast, categorically denied the espionage allegations. At a regular briefing on the 9th, Chinese Foreign Ministry spokesperson Guo Jiakun responded to reports that U.S. intelligence authorities had identified Alice Huang as a collaborator with Chinese intelligence agencies, saying, “The so-called Chinese spy allegations are groundless speculation intended to slander and smear China.” He repeated the same position when asked in a follow-up question whether he was denying reports that the woman had actually worked for Chinese intelligence. However, he offered no specific explanation of Alice Huang’s status or her relationship with Chinese intelligence agencies.

Doubts Grow Over China’s Semiconductor Capabilities

Market observers say the affair illustrates the current state of China’s strategy for self-reliance in advanced AI chips. The Chinese government has consistently highlighted achievements in developing domestic semiconductors and maintained that it can reduce its dependence on U.S. companies, including Nvidia. If the allegations are confirmed, however, they could suggest that China, while publicly championing technological self-reliance, was in fact willing to use unofficial channels to obtain advanced U.S. chips and related information.

Evidence of U.S.-made semiconductor imports uncovered to date lends weight to this analysis. In July last year, Bloomberg, citing investment approval documents and tender materials from local governments in China’s Xinjiang Uyghur Autonomous Region and Qinghai Province, reported that Chinese companies planned to build 39 data centers in western desert regions and install more than 115,000 Nvidia H100 and H200 chips subject to U.S. export restrictions on China. At the time, Nvidia and U.S. officials considered the plans unlikely to materialize given the export controls. However, according to a follow-up Bloomberg report last month, U.S. officials now believe, based on recently uncovered smuggling cases and other evidence, that the advanced AI computing resources that actually entered China may have exceeded the originally planned scale. AI industry research firm SemiAnalysis also estimated, based on supply-chain data and chip production and installation records, that hundreds of thousands of AI chips had entered China in circumvention of export controls.

Table 1. Evidence of China’s Acquisition of Advanced U.S.-Made Semiconductors

Attempts to Purchase Advanced AI Chips Continue

A series of chip-smuggling operations circumventing export controls has also been uncovered. In March, the U.S. Department of Justice indicted three people, including a co-founder of AI server manufacturer Super Micro Computer, on charges of illegally exporting at least USD 2.5 billion worth of U.S. AI technology to China. Prosecutors determined that they had used companies based in Southeast Asia and intermediaries in third countries to conceal the final destination of servers equipped with Nvidia chips and reroute them to China. In August, Taiwanese prosecutors also indicted nine people, including a senior Nvidia manager, on charges of smuggling advanced AI chips. They are accused of bringing 74 servers equipped with Nvidia B300 chips into China via Japan and Indonesia.

Evidence has also emerged that Chinese state-owned capital financed indirect chip imports. On the 2nd of last month, Bloomberg reported that its analysis of financial transaction documents submitted to Chinese authorities showed that Semitech Leasing Group, which is majority-owned by local governments, had provided substantial funding for advanced AI server purchases by Chinese information technology company Glory View Technology (Hongjing Keji). According to the documents, Glory View and its subsidiary borrowed more than CNY 3 billion from Semitech Leasing to purchase approximately 700 servers between August last year and May this year. Notably, the contracts also included financing for the purchase of 32 Asustek servers equipped with Nvidia B300 chips, which cannot be sold to China without U.S. government export authorization.

Past Allegations Draw Renewed Attention

The affair has also renewed attention on allegations of Chinese industrial and technological espionage previously revealed through individual investigations and warnings by intelligence agencies. On September 30, Britain’s domestic intelligence service, MI5, took the unusual step of issuing a public espionage alert, announcing that the China General Technology Research Institute (CGTRI), which has close ties to China’s Ministry of State Security, had been gathering intelligence while funding advanced technology research at British universities. According to MI5, the institute supported research in fields including AI, cybersecurity and covert communications, helping strengthen the technological capabilities of Chinese intelligence agencies. More than 100 British academics had participated in the research.

Amid these threats, Western efforts to counter China are also intensifying. At the Billington summit held in Washington, D.C., in September, U.S. Central Intelligence Agency (CIA) Deputy Director Michael Ellis described China as both a military and an economic threat and said that Chinese companies were also targets of intelligence operations. “Competition with China represents a fundamentally different threat from the past because it extends into the economic sphere,” he said. “Whereas we previously gathered intelligence on tanks, missiles and submarines, we now need to obtain information on critical technologies in the private sector.” He singled out AI, semiconductors and biotechnology as key intelligence-gathering fields, emphasizing that the CIA must change the scope and methods of its collection efforts because crucial information about these technologies is concentrated in private companies rather than government or military institutions.