Nvidia CEO Jensen Huang’s affair with an alleged Chinese spy has sparked fears of a major clampdown on the AI industry – pitting China hawks against those who warn that an overreaction will put the US at a disadvantage versus Beijing, The Post has learned.
Lawmakers from both parties are scrutinizing past remarks from Jensen, who was the most influential voice pushing US officials to curb export controls on Nvidia chips — even as they assess whether his affair with Megaspeed executive Alice Huang compromised national security.
Some DC sources believe the scandal will result in a bipartisan push for even stronger curbs on chip sales — with proponents concerned that Nvidia’s cutting-edge chips will fuel greater inroads into AI by Chinese companies.
At the same time, some of them warn that ordering such a crackdown – for example banning a loophole allowing Chinese companies to rent access to Nvidia’s high-end hardware through data centers located in Southeast Asia – would play right into China’s hands, a source close to the situation said.
“If they do that, it will just drive those foreign clouds to Huawei,” the source told The Post, referring to the Chinese telecom giant that is aggressively pursuing AI business.
“Ultimately, over time, those clouds will choose what’s available to them. It becomes an economic question – do you want foreign clouds to have American technology or Huawei technology?”
Ousting Huang himself, the source added, would be a “massive earthquake” during a fragile moment for the AI sector, which is already facing questions on Wall Street over whether it’s a giant bubble ready to burst.
“Nvidia is at the center of the AI buildout and he’s the central figure in the company,” the source said of Jensen Huang.
That argument seems unlikely to satisfy key lawmakers who were already concerned about China gaining access to Nvidia’s best hardware – even before Huang’s embarrassing misstep.
House Minority Leader Hakeem Jeffries (D-NY) said he “strongly supports” adding tougher chip controls to an annual year-end defense spending bill, while Sen. Jim Banks (R-Ind.) and Sen. Elizabeth Warren (D-Mass.) called for legislation targeting “various pathways through which China accesses advanced chips.”
“Republican chairs are reaching out to speak to Jensen and get some more details,” a Senate Democratic aide told The Post. “This is not, at this point, a partisan mud fight. This is bipartisan. We need answers about what happened here, what the FBI is looking into or already knew. We are in a bipartisan gathering phase.”
One key loophole currently under the microscope is China’s well-documented practice of accessing high-end Nvidia hardware housed in data centers based in Southeast Asia. US officials have suspected Singapore-based Megaspeed – and alleged Chinese intelligence asset Alice Huang – of exploiting the loophole to smuggle AI chips to China.
Nvidia has long resisted efforts to crack down on so-called “remote access,” while key Commerce Department figures like Howard Lutnick and undersecretary Jeffrey Kessler, who oversees the Bureau of Industry and Security, have been reluctant to take action.
Rush Doshi, a China policy expert and Senior Fellow at the Council on Foreign Relations, expects Democrats to push hard to close the “remote access” loophole.
“If the reporting is right, it potentially reveals corruption and compromise in American China policy on one of the most important issues of our time, including in ways that undermine AI safety for Americans,” Doshi said.
“Democrats and Republicans alike are going to want to investigate what they see as the decision to sell off American national security and economic advantage and AI safety for profit.”
In October, White House officials nudged Congressional staffers to tack on a provision that would direct the Commerce Department to close the loophole as part of the AI Overwatch Act, a measure cosponsored by Warren and Banks and set to be included in the year-end defense bill, The Information reported.
Nvidia declined to comment. Representatives for the White House and Commerce Department did not immediately return questions for comment.
Aside from pursuing answers about Huang’s personal conduct, lawmakers from both parties are sure to seek answers about the Trump administration’s handling of the situation – specifically, its delay in taking action despite warnings months ago that the Nvidia boss was tangled up with an alleged Chinese spy, and the Commerce Department’s dealings with Nvidia, Doshi added.
Last year, US officials grew concerned that Megaspeed, the largest buyer of Nvidia chips in southeast Asia, was involved in chip smuggling and asked Nvidia to audit its dealings with the firm. Nvidia initially replied that all of its chip sales were accurately recorded – even though Megaspeed had imported 50,000 more computer chips than what Nvidia linked to its data centers, Bloomberg reported.
Meanwhile, Bloomberg reported Nvidia general counsel Tim Teter directly called Kessler, who oversees chip export controls, in the summer of 2025 to ask about the department’s investigation into Megaspeed.
The report added that Commerce staffers were subsequently “muzzled in their ability to look into the company” and told to route requests on the matter through Kessler.
“BIS conducts all enforcement strictly by the book,” a spokesperson told the outlet. “BIS enforces aggressively across the board, including with respect to chip smuggling, and enforcement is at an all-time high.”
While the scandal is a major black eye for Nvidia, it’s unlikely to completely upend the company’s role as the linchpin of the AI movement, according to Daniel Newman, CEO of Futurum Group. The company’s deal roadmap is already largely set through 2028, and companies can’t easily find a replacement for Nvidia’s advanced hardware even if they were inclined to.
However, there are real concerns about Huang’s ability to remain at the helm of Nvidia – despite the fact that many consider him irreplaceable to the company and the lack of any obvious successor within its ranks.
“The big question is on the continuum of, is he a CEO that committed infidelity? I think he can survive that. That doesn’t mean it’s good,” Newman said. “All the risks around intelligence stuff is not survivable. If any line was crossed beyond him just having an affair, the board is going to have to move.”
