Nvidia CEO Hangs Out with Chinese Spy? + China’s New AI Export Controls + AI's Cyber Month from Hell

Hey, great to be with you, Adam.

Well, I think the most movie-esque version of this story is probably not true. I'm seeing some commentary on Twitter suggesting that this is a honeypot sex scandal, that this woman has seduced Jensen Huang. And while the article in the New York Times does discuss the two having a close relationship, that's also the term that is used to describe the relationship between Jensen Huang and President Trump. So, this woman, a Chinese national who, according to the reporting in the New York Times, is under surveillance by the US Intelligence Community and assumed to be a Chinese spy.

She is presumably a Chinese spy based on this reporting, but there is no evidence that this is a sex scandal of any kind, and the folks who only read the headline and didn't read the full article are missing that. But what there is a lot of evidence about is, number one, that the company which she previously identified herself as the CEO of, Mega Speed, which is a Singapore-headquartered company but has its origins as the spin-out of a Chinese gaming company, this is a company that very, very serious questions about their role in the smuggling of Nvidia chips to China had been repeatedly raised. And what this Times story now brings to the equation is the allegation that she is, in fact, a Chinese spy and giving information to the Chinese intelligence services, presumably based on her conversations with Jensen Huang, who, as the article also goes into some depth, has a close relationship with President Trump. So one way of reading this story is that this woman could be a valuable source of insight to the Chinese government, to Chinese intelligence services as to what's really on Trump's mind when it comes to the AI race, competition with China, etc., etc.

I think that that probably is true, but Twitter is also a great source of insight into President Trump's mind on all of these issues. In so many ways, he is an open book on this story. And so I think the actual focus of our attention really needs to be on the chip smuggling part of this story. And so while this was a great story and I commend the journalists involved in getting this information and making it available to the American public, I think we need to go back to some of the stories that were written about Mega Speed by Bloomberg and the New York Times that had a bunch of really good insights into this. So here's the story from Bloomberg on December 22nd, 2025, lead author McKenzie Hawkins, who has broken a ton of stories over the years about export control smuggling. And I'm going to read a long quote from this piece just because I think it is so extraordinary.

In an industry run by titans, a Singapore AI firm called Mega Speed is drawing an unusual amount of attention. In less than three years, the once obscure spin-off of a Chinese gaming enterprise has evolved into the single largest Southeast Asian buyer of Nvidia Corporation chips, a rapid ascent that's lifted the hopes for a regional champion in the lucrative business of AI cloud computing.

Bloomberg didn't find evidence that any of Mega Speed's Nvidia chips have been diverted to China or that the company has otherwise violated US export controls or other laws. Still, a review of hundreds of pages of trade records, corporate filings, job postings, and private documents from Mega Speed and its partners, plus interviews with dozens of people across six countries including US and foreign government and industry officials as well as technical experts such as SemiAnalysis, revealed inconsistencies in Mega Speed's Southeast Asia chip inventory and overall data center footprint. Since its founding in 2023 through November of this year, Mega Speed has imported Nvidia hardware worth at least $4.6 billion containing at least 136,000 Nvidia graphics processing units or GPUs.

Then it goes on. More than half of Mega Speed's chips are from Nvidia's current generation Blackwell lineup, processors that Trump, even after allowing Nvidia to ship its best previous generation products to China, said he won't approve for export to the Asian country. Mega Speed got the majority of its Blackwell processors more than half a year ago and another batch last month. Yet when Nvidia officials recently visited Mega Speed's data centers, they only saw hardware that contains a few thousand Blackwell GPUs, according to inventory information the chip maker shared with the US government, described by people familiar with the Mega Speed probe.

Asked about the rest of the Blackwell chips, Nvidia officials said the company visited separate Mega Speed warehouses where it saw the hardware imported earlier and confirmed that it hadn't been diverted to China, but this person declined to specify whether the number of components Nvidia cataloged in storage matches the outstanding volume from Bloomberg's analysis of Malaysian customs records. Mega Speed didn't answer multiple queries on the location of and plans for those processors, nor on its facilities writ large.

Now this is the juicy part. On its website, MegaSpeed describes three data centers previously identified as being in Malaysia and Indonesia, and now all listed as being in Southeast Asia. But the company told potential investors that in addition to those two countries, it was building an Nvidia computing cluster in a quote, 'specific area,' end quote, of a third unnamed nation, according to a slide deck in MegaSpeed circulated in 2024. In the presentation obtained by Bloomberg, MegaSpeed's quote, 'specific area,' end quote, facility was the only one not identified as being in Southeast Asia. To depict the project, MegaSpeed used a rendering of a massive AI data center in Shanghai whose corporate records show was financed in part by MegaSpeed's original Chinese parent plus a holding company created by MegaSpeed's founder. MegaSpeed also has something of a Chinese corporate twin.

This firm used similar presentation materials to MegaSpeed's, had a nearly identical website to a MegaSpeed sub-brand, and claimed MegaSpeed's Southeast Asia employees as its own. It's also posted job ads at and near the Shanghai data center whose rendering was used in MegaSpeed's investor deck, including for engineering work on restricted Nvidia GPUs. That is an amazing piece of journalism, and my compliments to the reporters, and my apologies for reading so much of the article. Everyone should go read the original piece on Bloomberg's website. But to me, this is glaring red flag after glaring red flag after glaring red flag. And I think what people need to understand is that when there are glaring red flags, there are unique export control responsibilities that companies have to take extra measures to ensure that diversion is not happening. Instead of that, after these reports have been out in the public ether for more than 10 months now, you have Jensen Huang and Nvidia defending the relationship with Mega Speed. And even after today, when these allegations of the CEO, or at least the woman who described herself as the CEO until recently, being a Chinese spy, you're still getting a rebuttal from Nvidia.

This is a quote from an Nvidia spokesperson going to CNBC on October 29th. Quote, 'The diversion allegations against this regional cloud were thoroughly investigated and debunked last year,' end quote. Come on. I mean, come on. Like, this is just not credible. It's not a credible interpretation of the pattern of facts. And over and over over the past few years, Nvidia has said that smuggling of chips basically doesn't happen and it's basically impossible. And so I just want to remind folks that number one, Nvidia is basically calling the US government wrong by saying that something the US government is saying is a factual matter is false. So for example, David Peters in February 2026, he's the Assistant Secretary for Export Enforcement at the Bureau of Industry and Security. He said at a House Foreign Affairs Subcommittee that he was asked whether chip smuggling is occurring, and he said, simply put, yes, there is chip smuggling, it is going on. And Jeffrey Kessler was reported as having said in a letter by Senator Cotton and Rep. Huizenga in March 2026, he said, quote, 'We catch significant smuggling and illicit exports, but we're concerned that it's just the tip of the iceberg.' Like what Jensen Huang told Bloomberg in October 2025, this was at the Computex conference in Taiwan, he said this, quote, 'Governments understand that diversion is not allowed and there's no evidence of any AI chip diversion. Recognize our data center GPUs are massive. These are massive systems. The Grace Blackwell system is nearly two tons. You're not going to be putting that in your pocket or your backpack anytime soon. And so these systems are fairly easy to keep track of, but the important thing is that the countries and companies that we sell to recognize that diversion is not allowed and everybody would like to continue to buy Nvidia technology and so they very well monitor themselves very carefully and they're quite careful about that.' Really? Really? They're they're monitoring themselves incredibly well. Let's just go over some of the things that have come out since then.

First, Supermicro, one of Nvidia's most important distributors around the entire world. The co-founder of that company was indicted in a $2.5 billion chip smuggling diversion scheme. Okay? That was in March of 2026. Then the Financial Times reported in July 2025 that at least a billion dollars worth of Nvidia chips were smuggled after the Trump administration's export controls on Blackwells. Then you've got the Mega Speed investigation that we already talked about. We also have an amazing piece of reporting from The Information back in December 2025 in which six different sources said that DeepSeek was developing its next model on several thousand banned Blackwell chips which were installed in data centers in permitted countries and then dismantled and shipped to China. Huh, that sounds a lot like what Mega Speed is being accused of here. The Department of Justice had Operation Gatekeeper, which is a $160 million case in December of 2025 where a Houston businessman and his company pleaded guilty and two Chinese men were taken into custody over at least $160 million in H100 and H200 exports. The Nvidia labels were replaced with a fictional Sand-Kian brand. The case broke the same day the Trump administration approved H200 sales to China. So Nvidia is saying that chip smuggling is basically impossible. These two men pleaded guilty to smuggling $160 million worth of chips.

Okay, then there's the fact that Nvidia personnel are now being arrested over this in Taiwan. And we talked about this on the podcast. In July and August of 2026, Bloomberg reported that there was a senior Nvidia manager and others who are accused of shipping 74 servers with B300 chips into China via Japan and Indonesia in what amounts to Taiwan's first known crackdown on the trade. And then I just want to say that this has been going on for so long. The New York Times in August of 2024 spoke with representatives of 11 companies in China that told the Times that they had sold or transported Nvidia chips. The Wall Street Journal in July of 2024 found at least 70 distributors openly advertising restricted chips.

What can you possibly say to be taken seriously when you're saying that diversion is impossible? There's nothing to see here. This is red flag after red flag after red flag. And you know, when you see a forest fire's worth of smoke and then you say that you don't need to change anything about what you're up to, I think it is absurd and preposterous. And so my hope here is that this story about the connection to the Chinese intelligence services will finally be the straw that breaks the camel's back and allows Congress to take some stronger moves here with its oversight of Nvidia, with its oversight of the Department of Justice and the Bureau of Industry and Security at Commerce to finally help America get serious about enforcing the laws that are on its book.

And Senator Elizabeth Warren, who's on the Senate Banking Committee, which has important jurisdiction in this case, she tweeted out today on October 29th this. Quote, 'Nvidia CEO Jensen Huang was reportedly targeted by a suspected Chinese spy whose Singapore-based firm bought billions in AI chips. Huang and Nvidia's board owe Congress answers. And we must pass bipartisan legislation to keep our advanced AI technology out of China's hands.' Now, I think Warren speaking out on this issue is noteworthy because she had previously called on Huang to testify before Congress. Nvidia refused, and then she released a mean statement about how he had time to gallivant around the world but didn't have time to come answer questions before Congress. Well, this gets to the midterm elections that we're going to talk about at the end of this. The Democrats are projected by forecasters to have a victory in the House and a real chance of a victory in the Senate, meaning that they would have committee leadership and subpoena authority. So I'm hopeful that we can finally start moving the needle on these issues because it is embarrassing the extent to which we are helping China win the AI race. I mean, if we are in an AI race, if the stakes of this AI race are every bit as important, or actually I would argue more important than the space race with the Soviet Union, you don't want American companies giving Gatorade and Nike shoes to the other team's racer.

All right, Adam, sorry, that was a long one, but this one really got me fired up.

Hey, just a question of the machinery of all this, Adam, a question for you, a congressional insider for many years. How fast can this stuff move if hypothetically Warren is super gung ho about dragging Jensen Huang in front of the committee, has the majority and therefore has subpoena authority? Can that happen in a day, a month, six months, a year? How fast can this move when Congress really makes up its mind to do something?

Yeah. Well, thanks for that insight.

Well, I think there's a few things that we can infer about what Chinese leadership believes about the current state of AI, the current dangers of AI, and China's competitiveness in AI based on their behavior. You know, the best guide to what China is thinking is usually not what China is saying, it's what China is doing. And they did an awful lot in this package of new export controls. And so I'm going to give you my read on what it says about the state of Chinese leadership's belief around AI. So the first, what did they really do? Well, this package of export controls includes more than just stuff on AI. It includes some stuff on photovoltaics and biomedicine. I'm not going to talk about that. I'm only going to talk about the AI stuff, which is 23 out of the new 40 export controls that China has adopted. And they basically created three tiers of the catalog regime for AI technology. And those are first the prohibited tier, the restricted tier, and the not listed freely exportable tier. And the sort of vague analogy to the US system would be export license required with a presumption of denial, although in their cases they basically say under any circumstances, so it's even stronger than our version of presumption of denial. Then they have restricted exportable only with a license, but that's going to get a strict review to make sure it's compliant. And then no license required, the third one which you know of course America also has. So they have this sort of tiering structure. And one thing to know is that this is actually already enforced. So even though it is a draft that they're circulating and requesting for comment, it already applies. You already have to comply with it and it restricts the ability of certain things that you could have, including in deals that are not yet finished. So this could be assigning ownership of a technology abroad, so like selling intellectual property, licensing the domestic technology for use abroad, a change in who owns it, so a foreign entity becoming an owner or actual controller of the company. And then literally I love this later, anything else later specifies, being the relevant ministry in the Chinese government. So I think the third one is perhaps worth starting about.

Manus was a notable AI agent startup in China that had attracted a lot of attention as a noteworthy startup. They had left China and reincorporated in Singapore and then were subsequently acquired by Meta. China blocked that deal from proceeding, so Manus is still a Singaporean company, but a Singaporean company that is for all intents and purposes controlled by the Chinese government to the extent that they decide that they want to take control of the firm. And I think a lot of people are looking at this new batch of export controls through the lens of China saying, how we make sure that never happens again, right? That maybe technology will go abroad, maybe technology will not go abroad, but the key thing to understand is that China is the one who decides, not private sector actors. And I think that assertion of authority over the flow of Chinese technology, and especially in AI, is an important thing to keep in mind here.

Yeah, so I think there's multiple problems that they're trying to solve simultaneously with this. The first is the one we were just talking about with Manus, which is the flow of advanced Chinese technology where they're proud of it. They actually think China has a meaningful competitive advantage. They want to restrict or at least control other countries' ability to have access to it. You know, maybe there'll be tech transfer, maybe there won't be tech transfer, but it's only going to happen with the Chinese government say so. That's the first thing. The second is there is an element of at least some version of what you might call AI safety in here, and that's most obvious at the intersection of AI and cyber. For example, there is an exemption, a broad exemption in this license regime for open source or open weight AI models. You don't have to get a license, or more accurately, it's essentially a notify and go kind of a license. The expected outcome is automatic approval if you're putting out an AI model that you're going to open source. But that doesn't apply if the model has advanced AI cyber capabilities. That is now in the prohibited tier. And so you're seeing Chinese model makers effectively trying to give their AI models lobotomies where they don't know anything about cyber because cyber has been removed from the training data set. I've said before that I think the Chinese Hugging Face incident equivalent is happening soon if it hasn't happened yet. This is a data point that's consistent with that interpretation. This is evidence of a Chinese government that is spooked by how powerful these models are getting and some of the incidents that we've talked about on this podcast in terms of what AI models are doing with respect to cyber security. And so they are now placing restrictions that affect not just the closed source proprietary models in China, but even the open source ones where previously the restrictions that applied to them had been comparatively modest. So those are two big goals that they're trying to say here. Control of the flow of technology where they can make those choices not based on a private sector company's ability to make a profit, but based on the Chinese government's strategic perceptions of its own geopolitical interests. And then there is a little bit of a safety part of the story too.

So China has had export controls, most notably on rare earths, squeezing the supply chain of rare earths using export control authorities in pursuit of leverage in negotiations with the Trump administration. And I think they feel like, hey, this is a fun tool. And it's also not unprecedented to be using export controls as a tool of AI competition, right? The United States has been doing that for a long time or even as a tool for safety regulation. When the US government wanted to block the release of Claude's Fable 5 model, they used export controls to crack down immediately. But I think the bigger reason is that China is on the one hand pro broad adoption of Chinese technology, but they don't want something like what has been proposed in the battery market in the United States, for instance. Some people who are supporting the idea of bringing Chinese automakers to America, maybe with joint ventures with American companies, some people are making the argument, hey, China has amazing battery technology. Maybe we can, you know, have them set up factories here and force technological transfer over to America. And some Chinese companies are like, well, we probably wouldn't want to do that, but let's talk about what the price might be for something like that. And the Chinese government is saying, nope, nope, we don't care what the price is. Companies don't get to make this decision. We get to make this decision based on our perception of our geopolitical interests. And then if you look at what they're restricting and the circumstances under which they're restricting it, the 23 AI items fall, you could say, into like eight different buckets. And shout out to China Talk, which had a great piece on this topic on October 21st. But the eight buckets we've got here are like frontier model core tech, AI chip and memory design, technologies related to the integration of large computing clusters, voice print and language AI. All of these are things where either the Chinese government thinks that they have some kind of meaningful competitive advantage. I think China thinks that they're getting increasingly good at the secret sauce behind large-scale integration of computing clusters. Other stuff like a voice print and language AI, I'm speculating here, but because it includes high-fidelity Chinese and minority language translation, I'm thinking back to where the Chinese government was using AI surveillance technology, both computer vision and voice recognition to monitor Uyghur populations, whether they were in the Xinjiang home region of that ethnic minority or anywhere in China, just an obsessive level of surveillance of the Uyghurs. And when a lot of those AI technical records about just how powerful the surveillance state that China had built were leaked, that was a real egg-on-face moment for the Chinese government. And so now with export controls, they're kind of trying to lock down that type of information, assert control over it to prevent those kind of scandals before. Again, no evidence that they're going to change their behavior in terms of doing all of these objectionable, unethical things, but they're taking steps to ensure that it's more difficult for those types of data leaks to happen in the future. And then finally, you get to the other four categories of sensitive data trained models, so anything related to government systems or critical infrastructure systems, cyber capabilities, AI content detection, AI agents and game AI. These are all areas where I think that the Chinese government perceives a real national security risk. You don't want to say that it's illegal to take a bunch of Chinese classified documents and take them out of China and give them to somebody else and then say it's okay to train an AI model on all of those documents and then walk out of the country with that trained model. So there, it's just kind of applying the more traditional national security and cyber security paradigm to this new universe of computing and data storage. And then finally, the cyber capabilities that I mentioned where it does appear that China wants more control over systems that are capable of generating malware, that are capable of adapting and evading discovery, those kinds of things are where the licenses again are prohibited and the open source exemption that applies to many of these other kinds of licenses is not eligible for use.

Basically, I would say that the underlying strategic rationale of AI being a race, export controls being a useful tool to compete in that race, this is China endorsing that logic, full stop. They just see the strategic rationale. Now, they may say that the Biden administration was illegitimate, unethical, paranoid, stupid, right? But fundamentally, they're just saying we admire the strategy, right? We think the toolbox is in fact useful for the strategic ends that you were aiming it at. Imitation is the sincerest form of flattery. And notably, this includes some kinds of imitations of many of the mechanisms that were included in the AI diffusion rule, the Biden administration's parting shot on export controls from January 2025.

So, models themselves are a controllable export if they are caught under any one of three tests in the Chinese system. Either it was trained on 10 to the 26 flops, the total model size exceeds 2 trillion parameters, or the model is top 10 as in a global leading capability in any kind of public evaluations that are not specified. But if you meet any one of those three boxes, exporting the model abroad does require an export license. And that's really interesting because if you connect that to what the Chinese government is thinking about overseas data centers, if you're a Chinese data center provider or a Chinese cluster provider, you can sell the chips and servers. Those are not going to be controlled at this stage. As long as there's not a transfer of core intellectual property around cluster engineering, the model itself, so on and so forth. But if you are transferring a Chinese company to its own overseas data center, there's an automatic license. And to me, that's a remarkable echo of what the diffusion rule sought to do by creating validated end users. So Microsoft's facilities in the UAE might be treated differently than just any UAE company that walks in and wants to buy Nvidia chips if they haven't gone through this validated end user program.

So that's really interesting. China is basically saying like we trust Chinese companies. They can transfer their technologies to their overseas subsidiaries with an automatic license. But anytime you want to transfer the know-how, so imagine, you know, a Saudi or a UAE company that wants to license some of the secret sauce of Chinese data center engineering or their their best models, all of that, now suddenly a license is required. And that is exactly the kind of behavior that China was criticizing and trying to mobilize a global campaign against when it comes to the United States and the diffusion rule. So again, imitation is the sincerest form of flattery and hypocrisy has never been something that the Chinese government is shy about engaging in.