Nvidia scandal sharpens US-China AI rivalry as Trump prepares for Xi meeting

Long before reports surfaced that former Nvidia CEO Jensen Huang was having an affair with a suspected Chinese spy, the advanced semiconductors his company makes were already at the center of the contest between the United States and China to dominate artificial intelligence. The scandal that led to Huang's resignation now threatens to escalate that rivalry.

As President Donald Trump readies for a meeting with Chinese President Xi Jinping in China next week, lawmakers from both parties are seizing on the affair to demand tougher restrictions on technology exports. "The scandal, in many ways, encapsulates the rivalry, where concerns around national security, export control, and foreign policy get intertwined," said Lian Jye Su, a chief analyst at the London-based research and advisory group Omdia.

Access to the most powerful AI chips sits at the core of the competition. U.S.-led restrictions have blocked China from obtaining the world's most advanced chips, prompting Beijing to accuse Washington of pursuing an AI monopoly. Nvidia once held roughly 95% market share in China, but its sales there collapsed under export limits first imposed during the Biden administration. After Huang lobbied Washington to ease the rules, Trump earlier this year approved exports of the company's advanced, though not most powerful, H200 chips.

Shaoyu Yuan, an assistant professor at New York University's Center for Global Affairs, said Washington's strategy focused on hardware, assuming that controlling where California-based Nvidia's best chips went meant controlling the AI race. That approach slowed Chinese companies, he said, but it assumed the threat was physical hardware rather than access to leaders like Huang. Yuan said congressional China hawks now have "a story with a name and a face," adding, "I don't think anybody in Washington wants to be seen as loosening the controls on chip exports to China right now."

This week, several congressional Democrats wrote to Commerce Secretary Howard Lutnick asking what officials knew of Huang's relationship with the reported Chinese spy and demanding an immediate halt to exports of advanced AI chips to China. The Senate version of a defense policy bill would let Congress review licenses for advanced AI chip sales to China, authorize the Commerce Department to track chips to prevent diversion to unauthorized regions, and press U.S. allies to match restrictions on exports to Chinese chipmakers.

Beijing has warned against using the episode to justify new limits. "The U.S. should stop fabricating the 'Chinese spy' narratives as a pretext for imposing technology restrictions," Foreign Ministry spokesperson Mao Ning told reporters Thursday. The woman linked to Huang is reported to be Alice Huang, a former executive at the Singapore-based cloud computing company Megaspeed. According to reporting by The New York Times, U.S. officials suspect she was recruited to potentially influence Nvidia into making its cutting-edge chips more available to China. Beijing has denied she was a spy and called the allegation "unsubstantiated."

Senior U.S. officials, briefing reporters Friday on condition of anonymity under White House ground rules, said Trump does not plan to confront Xi over the Nvidia matter. They also said they do not expect Chinese retaliation if Washington closes loopholes in existing measures that bar China from smuggling or using advanced computer chips.

Huang has been a frequent White House visitor and spoke with Trump at least twice this week as the scandal grew. In May, he boarded Air Force One in Alaska at the last minute to join Trump's state visit to Beijing, and in September he and his wife, Lori, sat at the head table when Trump hosted Xi in Washington. Meanwhile, the two countries have committed to creating a hotline for AI-related national security incidents. Kyle Chan, a fellow at the Brookings Institution, warned the scandal and possible new export controls could disrupt AI talks: "The question is whether Beijing can separate export controls from the AI safety discussion or will view them as connected issues."

The two powers are advancing AI along different paths, with U.S. companies chasing frontiers powered by cutting-edge chips and expanding data centers while China promotes open-source, more affordable models. Experts say China is emerging as a counterweight and closing the gap, with chipmakers like Huawei clustering less advanced domestic chips to work around restrictions, though Nvidia's products still outperform Chinese alternatives in training advanced models. Rui Ma, founder of Tech Buzz China, said the fallout adds urgency to Beijing's drive for a domestic semiconductor supply chain: "That was already a strategic priority, but if access to Nvidia computing power becomes even more restricted, Chinese companies will have increasingly few alternatives." Nvidia said earlier this year it had shipped only a small amount of H200 chips to China despite U.S. approval.