Jensen Huang Exit Puts Nvidia’s China Chip Strategy Under Pressure

Jensen Huang’s sudden departure from Nvidia has turned a personal scandal into a major question for the global AI industry. The company’s chief executive resigned on Thursday after reports of several extramarital affairs, including a relationship with an executive linked to alleged Chinese intelligence activity.

Nvidia’s board said chief financial officer Colette Kress will serve as interim chief executive until the company names a permanent successor. Huang had led Nvidia for nearly 33 years, helping build one of Silicon Valley’s defining entrepreneurial stories and a company valued at nearly $4 trillion.

A leadership crisis with supply chain consequences

The controversy began with reports involving Alice Huang, an executive at Singapore-based data center company Megaspeed. The U.S. intelligence agency believed Alice Huang was a Chinese government agent, while Beijing rejected the allegation as “baseless.” A Chinese foreign ministry spokesperson said Beijing has “always opposed the abuse of export control measures”.

On October 29, The New York Times reported that U.S. intelligence agencies suspected Alice Huang had been tapped by China’s Ministry of State Security to gather information from Jensen Huang. The newspaper said the two had an intimate relationship, later confirmed by Megaspeed’s cofounder in an internal memo.

Jensen Huang acknowledged one affair in a message to Nvidia staff, writing: “I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry,”

On Wednesday, The New York Times reported a second alleged affair involving Kimberly Powell, Nvidia’s vice president of healthcare. Hours after Huang left the company and its board, Reuters reported a third alleged affair involving another Nvidia employee, citing two people familiar with the matter.

Nvidia’s board launched an independent investigation into whether Huang had been targeted by a foreign intelligence operation. The company has also warned that it is “highly dependent on the services of our longstanding executive team” and that weak succession planning or a poor transfer of knowledge could hurt its long-term success.

The leadership change matters because Huang was more than Nvidia’s chief executive. He was a hardware provider, investor, community leader, and the biggest advocate for selling Nvidia chips to China. Huang argued that continued sales would help America maintain its market dominance, even as Washington restricted Nvidia from selling advanced chips to China.

China still depends on Nvidia’s technology

The allegations have raised questions about how restricted Nvidia chips reached Chinese companies. Megaspeed is one of Nvidia’s biggest customers in Southeast Asia, and The Information reported that the company purchased more than $4.8 billion of Nvidia chips over roughly two years.

The Information also reported that Alice Huang helped move about 240,000 H100, H200, and some A100 chips into China. Her companies invested in DeepSeek while promising to supply Nvidia chips, and she allegedly facilitated at least $7.5 billion in Nvidia chip shipments to Chinese firms.

Despite the U.S. export ban, Chinese companies have tried to access Nvidia chips remotely through data centers in Southeast Asia. A review identified more than $3 billion in Chinese computing projects built around Nvidia’s restricted processors, even though Nvidia has claimed that export controls effectively shut it out of China’s AI data-center market.

The Nvidia scandal will likely push the U.S. government toward tighter chip controls. Chinese AI labs are trying to secure overseas supplies before a crackdown, and traders in China are stockpiling restricted chips.

China has made progress with domestic processors, but it has not replaced Nvidia chips. In the first half of the year, Nvidia shipped 678,000 AI accelerators in China, down 44 percent from a year earlier but still equal to 34 percent of the market. Huawei’s chip unit shipped 572,000 accelerators, up from more than 300,000 a year earlier, giving Huawei 28 percent of the market.

Other Chinese suppliers held smaller shares: Huawei’s T-Head had 7 percent, Cambricon had 5 percent, Baidu subsidiary Kunlunxin had 4 percent, and Hygon had 3 percent. Chinese chips are catching up in performance, but Nvidia remains essential to AI development. Epoch AI said Nvidia’s B300 delivers 6.75 times the arithmetic performance of Huawei’s best Ascend 950 chip, while Huawei still lags behind Nvidia in production volume.

Most AI developers still train new models on Nvidia chips, even as AI labs work with chipmakers to ensure their models can run on domestic infrastructure. That gap gives Nvidia continued importance in China and explains why restrictions on American computing could also help Chinese chipmakers as Beijing directs more resources toward semiconductor self-sufficiency.

Asia watches Nvidia’s next move

The impact will reach beyond China. Taiwan and South Korea host a vast network of Nvidia suppliers, and the company’s departure has created uncertainty around those relationships. Several executives at Nvidia’s Taiwanese suppliers still expect steady orders in the coming years because demand from the AI industry remains strong, according to Taiwan’s Central News Agency.

Huang also held unusual influence across Asia, especially in Taiwan, his birth country. He enjoyed rock star status there, visiting night markets, sharing snacks with fans, and hosting banquets with executives from Taiwanese suppliers. He said Nvidia planned to invest $150 billion a year in Taiwan, and many internet users expressed disappointment at losing a technology role model.

Some users said the spy allegations and criticism of Huang could add to discrimination against Asians working in America’s technology industry. At the same time, UBS analyst Timothy Arcuri said, “Jensen has obviously been a singular force in many ways so the impact will likely be felt far and wide,” because Nvidia has become a key source of funds for neo-clouds, large language model developers, ecosystem partners, and suppliers.

Arcuri also said that even if a new leader follows Huang’s approach, there may be a pause in Nvidia’s willingness and ability to pursue major deals. That uncertainty matters because Nvidia controls nearly 90 percent of the market for advanced AI chips used to train frontier AI models, with customers including Microsoft, Google, Amazon, and Meta.

Markets reacted before the company could name a permanent successor. Nvidia shares had lost around 11 percent of their value this week through Thursday, wiping hundreds of billions of dollars from its market value and dragging down the S&P 500 and Nasdaq. Shares rose 1.8 percent in premarket trading on Friday, but the company remained on course for its longest streak of weekly losses since October 2012.

Shares in China’s Z.AI tumbled more than 10 percent in Hong Kong on Friday, while MiniMax hit record lows. South Korea’s Naver, one of Nvidia’s customers, fell more than 5 percent, while Nasdaq futures dropped 0.4 percent and S&P 500 futures fell 0.15 percent.

U.S. President Donald Trump called Huang a “genius” and said, “A Legend replaces a Legend,” while suggesting Tim Cook as a possible Nvidia takeover candidate. Trump is scheduled to meet Chinese President Xi Jinping next week in Shenzhen at the APEC leaders’ summit, adding another layer to the debate over export controls and AI chips.

For now, Colette Kress holds Nvidia’s top job while the search for Huang’s successor continues. The immediate question is not only who will lead Nvidia, but whether the company can preserve Huang’s role in China, maintain its Asian supply network, and keep funding the AI industry without creating new risks for Washington.

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