China's spy tactics may reshape the AI race for supremacy

There are few people in the world who can say they're phone buddies with Donald Trump, but Nvidia boss Jensen Huang is one of them.

The tech giant controls the most valuable company in the world and currently makes the hardware that could determine if China or the United States wins the race for AI supremacy.

If that's not power enough, he also has the ear of the US president.

Just a few months ago, Mr Huang was on stage speaking on a panel about AI when he famously took a live phone call from Mr Trump and put him on speakerphone.

So it's no exaggeration to say Huang's affair with an alleged Chinese spy is a bombshell in the high-stakes contest for not only the future of tech, but potentially the future of the world.

Mr Huang, a US citizen, co-founded and has overseen Nvidia for more than 30 years — though many people may never have heard of the business until this week.

The company makes the world's highest-grade computer chips that are used, or desired, by businesses and governments across the globe to power and scale up their AI models.

It's the kind of technology China currently needs if it wants to fulfil its ambitions of overtaking the US to become the world's AI superpower.

And it's why America has imposed strict export controls to restrict the sale of the advanced chips into China to protect trade secrets.

Now, the US tech sector and American politicians are asking whether an alleged honey trap has put those gains at risk.

Mr Huang this week admitted to an affair with a woman named by US officials as Alice Huang (of no relation to each other), a former executive at Singapore-based tech company Megaspeed.

American authorities have been investigating Megaspeed and Ms Huang for years, alleging the company has been flouting US restrictions and facilitating avenues to get high-grade Nvidia chips into China.

These concerns grew when US intelligence concluded Ms Huang was acting as an agent and passing information to Beijing's Ministry of State Security, according to US media.

The New York Times also reported that further intelligence about a romantic engagement between Mr Huang and Ms Huang was presented to the US president last year and he chose to take no direct action.

Now Nvidia has confirmed it's investigating an alleged espionage plot that involves one of the most important figures in the entire AI industry.

Trump today said the ‌FBI was also looking ‌into the ⁠affair, and said he had spoken to Mr Huang over the phone.

"I asked him about that and he said he had absolutely no idea that the person in question was a spy," the US president said at a White House briefing.

Beijing has denied Ms Huang is a Chinese spy and has labelled the claims as "smears" against China.

English-language state media outlet the Global Times also called it a "political witch hunt" and suggested Western media had been seduced by the lure of a sexy spy plotline.

"It's quite a story, complete with all the twists and suspense of a Hollywood thriller. But so far, the public has seen no hard evidence to back up the central allegations," the Global Times said.

The outlet also said the extramarital affair had no connection to chip manufacturing, nor did it pose a technical risk.

But it's no stretch to imagine Mr Huang would be an attractive target for any Chinese espionage attempts.

He's a man with power, technical prowess, and a direct line to America's commander in chief, who is shaping the future of AI outside of the global south — and is China's main competitor in the AI race.

Mr Huang has been to the White House at least five times since Trump returned to office and has been lauded by the US president as a "great, brilliant person" who had "done amazing things for our country".

Despite that, the business, security and geopolitical implications of the affair are sending shockwaves throughout America and the US administration.

And it's shocked many tech analysts who've traditionally viewed Mr Huang as a meticulous, methodical and militant figure, who demands the highest of standards from his staff.

Nvidia says it's confident no trade, or national security, secrets have been divulged to Beijing, but it will bring in outside counsel to fully investigate.

But this probe will be just one chapter in a long book of scrutiny into this affair.

This is more than just about potential access to tech — it's about the potential access to the people Mr Huang knows, and the policy he may have had a role in shaping.

Mr Huang has already been called to give evidence before at least three congressional committees, where it's likely he'll face a grilling over the affair.

It could turn out to be a symbolic win for China, which will get to see a major rival scrutinised, and the US administration asking questions about its own policies and approaches to the tech sphere.

It's especially relevant, as China prepares for its third meeting between President Xi Jinping and Donald Trump next week at the APEC summit in the Chinese city of Shenzhen.

The last time Mr Trump travelled to China, in May this year, he famously picked up Mr Huang from a tarmac in Alaska while en route to Beijing.

The Nvidia boss also sat beside Mr Trump as the two presidents met in May.

But despite AI being top of the Xi-Trump meeting agenda again, it's unclear whether another travelling invitation will be extended to Mr Huang or whether he'll even still be in charge of Nvidia.

For now, the board is standing by the man who is thought of as Mr Nvidia, despite shares plummeting after news of the investigation.

But a boss mired in scandal, even one as influential as Mr Huang, may not be a tenable future.

So there's every opportunity for the blast radius from these revelations to expand further.