Hormones guiding history? Even with Jensen Huang resigning from Nvidia, the chip landscape will be irrevocably changed

Even with Nvidia's board announcing on Thursday the resignation of co-founder-CEO Jensen Huang - with a second affair, one with Nvidia vice-president of healthcare Kimberly Powell, revealed on Wednesday - the big question now is whether 'L'affaire Alice Huang' will be fully investigated.

Trump has already shown governmental reluctance to investigate a major Republican Party donor. Besides, he needs to weigh the risk of disrupting relations with China over the issue, especially since China controls over 80% of processed rare earth supplies.

Megaspeed International, the Singapore-based cloud computing firm founded by Alice Huang, has been reportedly using Nvidia chips to provide compute power to Chinese buyers. China can use compute power available in different countries, even if it can't buy advanced chips directly from the US. In such a circumstance, Washington may move to restrict sale or leasing of compute power using US chips.


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Beijing-based Global Times has written off the 'espionage story' as manufactured to weaken US-China relations. Some commentators have pointed out that the scandal has conveniently broken at a time when Microsoft has started releasing its own chips. But such 'leakages' aren't new.

In February, Anthropic CEO Dario Amodei had announced that his company had worked proactively to deploy its series of LLMs, Claude, across US Department of War and intelligence agencies. Reports later revealed that Centcom and Pentagon had used Claude during airstrikes against Iran that started in March. This was the first major disclosure about a privately-run AI model being used for 'mission-critical' applications, like AI analysis, modelling and simulation, operational planning, and cyber ops.

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The Jensen-Alice honeytrap incident needs to be viewed in the context of its political and military implications, not as yet another case of corporate espionage. The ex-Nvidia CEO may be an 'honorable guy' for Trump. But stakes for the US and several countries, including India, are too high for investigators to slow down because of a presidential certificate.

China has developed a certain expertise in accessing foreign technologies through a variety of means since launching economic reforms in December 1978. It has also become adept in the use of Western-style propaganda, hiring lobbyists and PR agencies to counter repeated accusations of technology thefts.

Foreign collaboration has been fundamental to China's semiconductor development. Its chip industry has flourished with the help of machinery, manufacturing expertise, designs, investment and trained personnel from the US, Japan, Taiwan, South Korea and European countries. Such legal routes suffice for producing copycat products, but fall short of driving true innovation.

Zhang Rujing, a.k.a. Richard Chang, regarded as China's 'godfather of semiconductors', after moving to the US from Taiwan in his early 20s, started working at Texas Instruments (TI) in Dallas from 1977. In 1997, he left TI, going on to found Semiconductor Manufacturing International Corporation (SMIC) in Shanghai, drawing on international expertise, foreign investment and overseas equipment suppliers.

Since then, government agencies in the US, South Korea, Taiwan and the Netherlands have, on different occasions, accused China of stealing materials, designs and technology related to the semiconductor chip industry.

In one case, China agreed to pay damages worth $200 mn after Taiwan Semiconductor Manufacturing Company (TSMC) accused SMIC of stealing fabrication process and manufacturing secrets. ASML of the Netherlands also filed cases of pilferage against individual Chinese nationals associated with their projects in China. The US accused China of stealing Micron's DRAM (Dynamic Random-Access Memory) technology, and Avago/Skyworks semiconductor trade secrets. South Korean prosecutors have levelled charges involving unauthorised transfers of Samsung and SK Hynix semiconductor technology to Chinese ventures.

One way of illegally accessing tech has reportedly been using honeytraps on foreign officials, scientists and businessmen. Female spies connected to Ministry of State Security (MSS), a.k.a. Guoan, China's intelligence agency, are allegedly put to the task. MSS also obtains information and support services from intelligence agencies of countries that have friendly ties with China. Thus, a honeytrap can be set in a range of locations.

If Jensen really is found to be a victim of Chinese espionage, the implications would be mind-boggling. Nvidia designs advanced processors powering much of the global AI revolution. Tech implications could be substantial. A possible theft could narrow down US tech advantage in chip and AI industry.

The scandal also has the potential of causing serious political discomfort for Trump as Democrats are bound to question his decision to sell advanced Nvidia chips to China on Huang's advice. Washington might respond by imposing fresh restrictions on sales of chips to not only China but also to other countries. Such a decision can have serious impact on India, which mostly uses Nvidia chips.

Even with Jensen removed from Nvidia, hormones may well have decided the march of history.

The writer is former TOI Beijing correspondent