Nvidia scandal raises concerns over Chinese spying as Lutnick faces questions

Updated 8:49 p.m. ET, Nov. 13

Key points

• Jensen Huang resigned as Nvidia CEO after reports of multiple affairs, including one with a suspected Chinese spy, Alice Huang.
• NVDA closed down 2.01% on Nov. 13 and was down 1.12% after hours, with the scandal now drawing in US export-control scrutiny.
• Senior officials said Trump will not raise the Alice Huang allegations with Xi Jinping, a meeting focused on implementing the trade agreement.

Nvidia (NVDA) chief executive Jensen Huang stepped down this week after reports of several affairs, one involving a suspected Chinese spy, Alice Huang, who is not related to him. Governments worldwide say Beijing runs a sweeping effort to take business and technology secrets and to collect intelligence on foreign leaders and military strategy.

The exposure goes beyond one executive. Documents reviewed by Bloomberg show that a Chinese firm set up by Alice Huang acquired contraband AI chips, which ended up in a Shanghai data center linked to Megaspeed International. Megaspeed, a Singapore-based cloud-computing company, is being examined for possible help in shipping billions of dollars of Nvidia chips to China in breach of US restrictions.

Senior US officials said Trump does not plan to raise the allegations against Alice Huang with Xi Jinping, a meeting focused on implementing the trade agreement, on a trip that also brings Elon Musk, the CEO of Tesla and SpaceX, to Shenzhen for the Asia-Pacific Economic Cooperation summit on Nov. 18 and 19 CNBC.

The White House said Trump plans a three-way summit in Shenzhen with Xi and Russian President Vladimir Putin. China has called the allegations against Alice Huang baseless. The Commerce Department, led by Howard Lutnick, is also facing questions about whether it has been aggressive enough at blocking advanced chips from reaching China.

Colette Kress is interim CEO at Nvidia. Nina Trentmann, a senior editor, said Kress is likely to become more visible, with more public comment on the firm's financial results and strategy Bloomberg. Randall Peterson, founding director of the London Business School Leadership Institute, argues the board let down both the company and Huang.

NVDA shares closed down 2.01% on Nov. 13 and were down 1.12% in after-hours trading as of 8:00 p.m. ET.

What's next: Trump travels to Shenzhen for the Asia-Pacific Economic Cooperation summit on Nov. 18 and 19, where officials say the Alice Huang allegations are not expected to come up with Xi Jinping.

Sources: Bloomberg, CNBC, Financial Times, The Guardian