Trump was briefed on the Nvidia spy memo a year ago and didn't act

Nvidia chief executive Jensen Huang resigned on Thursday after reports of an affair with a Chinese businesswoman whom US officials suspect of spying for Beijing 7

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. The resignation has turned a personal scandal into a Washington fight over AI chip exports 7

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Huang, Nvidia's co-founder and the man at the center of the AI chip boom with close ties to Trump, admitted to extramarital affairs, including reportedly with Alice Huang 2

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. He has offered no explicit reason for stepping down 2

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. Alice Huang was an executive at Megaspeed, a Singapore-based Nvidia partner Washington suspects of helping China get hold of restricted chips; the two are not related 7

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. A US intelligence memo reportedly alleged she was recruited to potentially influence Nvidia toward making its most advanced chips more available to China 4

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. Per New York Times reporting, Trump was briefed on that intelligence about a year ago and decided not to act 2

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. He joined Trump's May state visit to Beijing and sat at the head table when Trump hosted Xi in September 4

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. Nvidia shares closed down 4.34% at $166.19 on Thursday, then rose 0.99% after hours 6

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Congress seizes the moment

Speaker Mike Johnson said Thursday that limiting China's access to advanced AI chips has become a major issue, with "a developing consensus in Congress that is an important position to take" 7

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Republicans aim to attach new export restrictions to the annual defense authorization bill 7

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. Lawmakers are pressing at least four standalone measures 7

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. One gives Congress oversight of AI chip exports, one requires location tracking of advanced processors to catch smuggling, and one pressures allies to restrict chipmaking-equipment sales to China 7

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. A fourth lets the Commerce Department stop Chinese firms renting overseas data centers stocked with Nvidia chips 7

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. The Senate version of the defense bill already contains similar provisions 4

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. None of these measures is law yet; they are proposals, and their timing against the summit is unresolved 2

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. Chinese AI companies, meanwhile, are reportedly renting Nvidia computing capacity outside China on fears the scandal could spur Washington to close the remote-access route 7

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The scandal is also reaching cabinet level. Senior White House officials have reportedly discussed whether to push out Commerce Secretary Howard Lutnick 7

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. Treasury Secretary Scott Bessent reportedly questioned him over why Megaspeed was never added to the Entity List, the US blacklist of barred firms 7

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. Congressional Democrats wrote demanding an immediate halt to advanced AI chip exports to China 7

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. The Commerce Department did not reply when asked for comment 3

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The chip trail

Bloomberg News reported Friday, citing Chinese government filings, that a company founded by Alice Huang ended up with servers containing Nvidia H800 chips 2

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. The servers were bought from Dell by Aperia Cloud Services, an Nvidia partner in Singapore, even though the chips have been banned from export to China since 2023 2

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. How Shanghai Longteng Intelligent Computing, the company Alice Huang founded, acquired them, and whether she was involved, remains unclear, per the report 2

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. Megaspeed says it is investigating whether it complied with export controls, and Malaysia is examining one of its subsidiaries over possible chip diversion 2

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Beijing and the summit

China said it opposes new US export controls. Foreign ministry spokesperson Mao Ning said the US "should stop fabricating the 'Chinese spy' narratives as a pretext for imposing technology restrictions" 4

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. Beijing denies the spy allegations outright 3

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. Beijing's opposition raises the diplomatic stakes days before the two leaders are due to meet 2

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Trump and Xi are expected next week at the Asia-Pacific Economic Cooperation summit in Shenzhen 2

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. US officials said Trump does not intend to confront Xi over the Nvidia issue 2

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. By officials' account, the timing constrains how hard Washington can move without derailing the summit 4

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. The two sides had agreed in principle on a hotline for AI national-security incidents, and Brookings' Kyle Chan said the scandal could disrupt those talks 4

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Analysts said Washington's strategy assumed the threat was physical hardware, not access to leaders, and that the scandal changes the nature of the export-control debate. Omdia's Lian Jye Su said it "encapsulates the rivalry, where concerns around national security, export control, and foreign policy get intertwined" 4

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. Rui Ma, founder of Tech Buzz China, said the fallout "only adds urgency" to Beijing's push for a domestic semiconductor supply chain 4

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China access was already heavily constrained before the scandal 4

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. Nvidia once held about 95% of the China market, and sales have plummeted under restrictions first applied during the Biden administration 4

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. He is expected to appear before Congress ahead of Thanksgiving, though no date has been set 7

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