Nvidia Loses $430 Billion as CEO Affair and China Chip Claims Escalate

Nvidia lost roughly $430 billion in market value over two trading sessions as reports intensified that CEO Jensen Huang's relationship with a Chinese businesswoman, alleged to be a spy for Beijing, helped facilitate at least $7.5 billion in chip shipments to China.

The controversy escalated on several fronts on Tuesday. Senate Democratic Leader Chuck Schumer demanded answers from the administration and tighter curbs on chip exports to China. Nvidia's independent directors hired outside counsel to run an internal investigation. The FBI is separately examining whether 63-year-old Huang was targeted by a foreign intelligence operation, according to reports.

Nvidia's stock, nearly flat for the year before the affair became public, has fallen 9.5 percent since the reports emerged. The shares had already lagged the broader market on investor unease over whether massive spending on AI will deliver adequate returns.

The stakes are considerable. Nvidia is the dominant supplier of AI chips, and the allegations have transformed Huang's personal conduct into a governance and national security question for a company that anchors the American AI industry.

What did Trump know, and when?

The New York Times reported Tuesday that Secretary of State Marco Rubio briefed President Donald Trump aboard Air Force One en route to China in May about US intelligence indicating Huang was involved with a woman believed to be a Chinese spy. The briefing marked at least the second time in seven months that Trump had been told about the intelligence, the Times reported, citing people with knowledge of the matter.

A White House official disputed the report and referred Reuters to Trump's comments on Monday.

Trump said Monday he had spoken with Huang and asked whether he knew the woman was a spy. Trump said Huang told him he had "absolutely no idea," and that he believed the Nvidia CEO. Trump also said he had not known about the alleged ties when Huang accompanied him to China in May.

Schumer said Tuesday that Congress must have a full accounting of Trump's defense of Huang, and he called on lawmakers to quickly approve new restrictions on US chip exports to China.

"He's supposed to protect America, not China, not his friends," Schumer said, accusing Trump of failing to address foreign espionage in the American technology industry.

Axios, citing sources, reported Tuesday that Commerce Secretary Howard Lutnick was sent a highly classified memo warning about the Nvidia CEO's relationship with Alice Huang. Reuters could not immediately verify that report. The Commerce Department and Nvidia did not immediately respond to requests for comment outside regular business hours.

Who is Alice Huang?

Alice Huang, also known as Huang Le, together with her husband and sister built a network of companies across China and Singapore to acquire Nvidia chips, The Information reported.

When orders for Nvidia chips subject to US export restrictions stalled, Alice Huang used her ties to Nvidia to secure supplies, helping move about 240,000 H100, H200 and some A100 chips into China, according to the report. Some of those chips ultimately served Alibaba, Tencent and smaller Chinese AI labs.

Reuters could not determine Alice Huang's whereabouts to seek comment.

She held senior roles at a Shanghai investment firm before becoming the controlling shareholder of Singapore-based cloud-computing company Megaspeed International. Megaspeed was linked to Century Litong, a China-based company that secured preferred cloud partner status with Nvidia in 2023, giving it priority access to the company's chips.

Why is a trade blacklist in play?

The Financial Times reported Tuesday that several US government agencies pushed for Megaspeed to be included on the entity list — a trade blacklist of groups connected to China that US officials say pose national security risks — but the US Commerce Department delayed the effort.

The Commerce Department had sought more information about some companies under consideration, the FT reported. It was unclear whether Megaspeed was among them, but the delay has left the company off the list.

The US Department of Commerce and Nvidia did not respond to Reuters requests for comment. Alibaba, Tencent, Megaspeed and Century Litong were not immediately available for comment outside regular business hours. Reuters could not independently verify the reports.

How is Nvidia's board responding?

The board has retained Joon Kim, a Wachtell Lipton partner and former acting US Attorney for the Southern District of New York whose practice includes internal investigations and white-collar defense, to lead the probe.

Nvidia has said its board has no reason to believe US national security or company secrets were compromised, and that Huang has committed to cooperating with the internal review. Huang has told employees he was unfaithful to his wife but provided no details about the relationship. China's foreign ministry has called the spy accusations "groundless."

Huang apologized to top executives at a closed-door meeting on Monday before pivoting to business, and he was back holding meetings at Nvidia's headquarters on Tuesday, CNBC reported.

Why does governance matter here?

Huang owns about 3.6 percent of Nvidia but does not have majority voting control. He has led the company for more than three decades and runs an unusually flat organization in which dozens of executives report directly to him. That structure concentrates decision-making in one person, and the affair has raised questions about Nvidia's governance and its dependence on a single CEO.

The combination of an FBI examination, a Senate demand for new export restrictions, and an internal Wachtell Lipton probe means Nvidia now faces simultaneous legal, political and market pressure over its most important asset: the trust of Washington and its AI customers.