This is the free, weekly edition of The Backchannel.
I’ve been going back and forth in my head about posts to write about the rapidly expanding scandal tied to NVIDIA CEO Jensen Huang and presumed Chinese spy Alice Huang (no relation). High-end processors, export controls, NVIDIA’s complex and bubbly investments in its customer companies … these are all highly technical topics where my knowledge is limited. (A parenthetical: I’m being immensely helped by email guidance from TPM readers in these fields, so keep those emails coming.) But I know a lot about the dynamics of political scandals. And if you do, you know that this one is very big because the essential elements are all visible from the beginning.
What are those essential elements?
There appears to be no serious question that Alice Huang was working on behalf of the Chinese government, working as a spy. We know her relationship with Jensen Huang was sexual; he has admitted that. We know that the president of the United States knew of this relationship and Alice Huang’s identity as a presumed spy for a year and took no action against Huang, either to press him to end the relationship, to distance himself from Huang, or anything else. (Unsurprisingly, reporting suggests that Trump didn’t want to do anything about it because NVIDIA’s commercial success was central to the AI boom propping up the whole U.S. economy.) We also know that Jensen Huang was successfully lobbying Trump to make it easier to sell NVIDIA chips to China — that’s what China wanted but it was also in the business interests of NVIDIA. Finally, a Commerce Department investigation into Alice Huang’s company, Megaspeed, was abruptly halted earlier this year and transferred to the Justice Department after what appeared to be an irregular intervention by NVIDIA’s general counsel. This report (paywall) from The Information last night finds that the relationship dates back to at least 2023 and that Huang’s company rapidly ascended to the ranks of NVIDIA’s highest tier of preferred customers. As The Information put it, “the two have built a rapport that facilitated the shipment of at least $7.5 billion worth of Nvidia chips through Chinese companies.”
Given all these data points, it seems very hard for me to see how Jensen Huang can come out of these various investigations unscathed even if there’s no major wrongdoing. The same applies to Trump — the reporting is crystal clear that he knew about this major security problem and did nothing. What makes this so potent as a scandal is that the key elements are all known. So reporters, politicians, everybody knows the overall story is bad. It’s just the details that remain unknown. That gives everyone huge incentives to keep digging and not let up.
To illustrate what I mean by all the elements being known in advance, we can imagine an alternative scenario where there’s a big spy plot but the targets of it didn’t know. Or perhaps there’s a big spy plot and the U.S. government had suspicions but they didn’t inform President Trump. So he’s off the hook. Or maybe because everything is so gutted in the executive branch no one who works export controls thought to investigate it. But they were investigating it. Those are the kinds of connections which make scandals explode or run dry. And they’re all confirmed in advance. It touches everyone.
There is one detail that is key but has not been discussed. It seems hard to imagine that U.S. intelligence wouldn’t have wanted to give Huang a defensive briefing. These are commonplace and involve no assumption of wrongdoing on the part of the person briefed. It’s U.S. intelligence telling some important U.S. person: Look, this person you’ve gotten to know and who is pursuing some kind of relationship with you — we think they’re a spy. I have seen no reporting that this took place. If it didn’t, I get it’s conceivable that Jensen Huang didn’t know that Alice Huang was a spy. But given how many people around or close to him knew, it’s very hard for me to imagine that the Times story from late October was the first he’d heard of it.
The other complexity to the story is that the interests of the Chinese government here lined up very well with the commercial interests of NVIDIA. In other words, we know that NVIDIA and Huang were lobbying Trump to loosen export controls and allow it to sell its most advanced chips to China. But of course they were. They’re trying to sell everywhere and they want their processor architecture to dominate the global market. We don’t have to assume any nefarious motive.
But it runs both ways. All this push is explainable in terms of NVIDIA’s commercial goals. But since Jensen Huang was involved in an extramarital affair with a Chinese spy and went to great lengths to give her company the highest levels of access to NVIDIA chips, all that lobbying has to fall under a cloud of suspicion because it’s impossible to know how much that relationship colored his perspective.
Add in the enticement of sex in the story, the mammoth implications for the U.S. economy, and this is like a wildfire just starting to burn out of control.
