Nvidia scandal spotlights growing espionage risks for AI firms

Nvidia Corp. Chief Executive Jensen Huang’s affair with an alleged Chinese spy has underscored how Beijing and other nations are increasingly turning to corporate espionage to gain an edge in the global artificial intelligence race.

The Nvidia scandal has erupted as another recent AI spying case unfolds in the U.S. courts: An OpenAI engineer from Saudi Arabia faces charges of planting a hidden recording device in one of the ChatGPT maker’s executive conference rooms. In January, a federal jury also convicted a former Google engineer of stealing AI trade secrets for China.

Former officials and intelligence analysts warn the incidents highlight the growing risks to private sector firms as the global competition for artificial intelligence heats up — and foreign nations make it a priority for spies and industrial espionage efforts.

“The AI companies are increasingly becoming targets of foreign intelligence services,” said Chris McGuire, a former White House official in charge of technology competition with China now at the Council on Foreign Relations. “If you want insight into what’s happening in the most sensitive U.S. technology areas, you don’t go infiltrate the Department of Commerce. You infiltrate Nvidia and OpenAI.”

Nvidia, the world’s second most-valuable company, has said an investigation by its board will address recent reports that its CEO “has been the target of a foreign intelligence effort.”

The firm at the center of the global AI boom has said it has no reason to believe that either U.S. national security or Nvidia secrets were compromised. Huang said he would cooperate fully and that he is committed to protecting Nvidia and supporting America’s national security.

President Trump said the FBI is looking into Huang’s extramarital relationship with a suspected Chinese spy, but offered his support to the celebrity executive, who has traveled the world extolling the virtues of AI.

“I just know Jensen very well,” Trump said. “I just think he’s a very honorable man.”

China’s Foreign Ministry spokesman Guo Jiakun has denied suggestions that China spied on the Nvidia chief through Alice Huang, who met the world’s preeminent AI industry executive as the founder of Megaspeed International. Her firm was the largest buyer of Nvidia chips in Southeast Asia — a major route for smuggling the firm’s advanced hardware into China.

Nvidia’s dominant position in the high-end chip market gives it unique insights into a technology seen as increasingly crucial to the modern economy — as well as for an edge in advanced military applications.

China’s top spy agency would likely have tasked Alice Huang with a range of priorities, including securing information about Jensen’s private conversations and corporate plans, according to former intelligence officials and analysts. The Nvidia chief’s close ties to Trump would also make the CEO an appealing target.

“To be able to ask Jensen covertly what he saw, what he thought, what are the conversations he heard from other global leaders” at places such as the White House “is going to be humongous for China,” said William Evanina, former director of the National Counterintelligence and Security Center, which leads the U.S. government’s efforts to counter foreign spying.

Another likely task by China’s Ministry of State Security would have centered on more deeply penetrating Nvidia’s supply chain by pushing deals with compromised subcontractors and encouraging the hiring of other Chinese operatives, said Evanina, who also led counter-espionage efforts at the Central Intelligence Agency.

He added that Alice Huang may also have tried to influence Jensen’s views on specific chip contracts and global policy issues of importance to China. The Nvidia chief has long pushed to relax export controls on China and allow the company to export advanced chips there.

Alice Huang’s firm, Megaspeed International, has previously denied allegations that it helped China evade export controls.

A bulletin posted by the Office of the Director of National Intelligence’s Counterintelligence directorate in late October warned government and business leaders about the risks of Chinese espionage tactics.

“When partnering with any foreign entity, U.S. state and local government and business leaders should exercise caution, conduct thorough vetting, and build transparency and accountability into partnership agreements to guard against the risk of foreign government exploitation,” the note said.

Back in April, Republican Sen. Jim Banks of Indiana warned about the growing Chinese espionage threat in a letter sent to a group of AI industry CEOs that included OpenAI’s Sam Altman and Anthropic PBC’s Dario Amodei, but not Jensen Huang.

Drozdiak writes for Bloomberg.