Nvidia scandal may test fragile US-China truce, experts say

The fallout from the Nvidia scandal may test the fragile truce between the U.S. and China, analysts say, as calls in Washington grow to tighten semiconductor export controls just days before U.S. President Donald Trump is due to meet Chinese leader Xi Jinping in Shenzhen, China.

“I think that [scandal] could have a bigger impact down the line during the meeting in Miami or even further down the line,” said Ilaria Mazzocco, a senior fellow at the Centre for Strategic and International Studies. Mazzocco was referring to another Trump-Xi meeting expected in December on the sidelines of the Group of 20 (G20) summit in Miami.

Mazzocco added that the bilateral arrangement was underpinned by the leverage each country held over the other, particularly China’s dominance in rare earths, which could limit Washington’s room to tighten restrictions.

“It has the potential to deepen mistrust between the U.S. and China at a sensitive moment in bilateral relations,” wrote George Chen, a Partner and Chair of Digital Practice at The Asia Group, in a Substack post.

However, some experts argue that the controversy is unlikely to have an immediate impact on the coming meeting during the Asia-Pacific Economic Cooperation (APEC) summit in Shenzhen, given Trump’s public backing of Nvidia CEO Jensen Huang and his continued efforts to build a closer relationship with Xi.

“I really don’t see this as having a huge impact on the summit,” said Sam Bresnick, a research fellow at Georgetown University’s Centre for Security and Emerging Technology.

Nvidia’s board launched a probe on Sunday after a New York Times report linked Huang to a Chinese businesswoman suspected by U.S. intelligence officials of passing information to Beijing.

In a statement, Huang admitted he had been unfaithful to his wife and would fully cooperate with the inquiry.

Beijing calls allegations ‘nothing but smears against China’

Chinese Ministry of Foreign Affairs spokesperson Guo Jiakun called the allegations “unsubstantiated” and said they amounted to “nothing but smears against China.”

Huang became a regular presence in Washington as Nvidia sought to sell its advanced chips to China, forging a close working relationship with Trump.

Several lawmakers and defence analysts have spent months opposing the Trump administration’s decision last year to permit sales of Nvidia’s H200 chips to China, the company’s second-best AI chips, warning the move compromises the push to contain Beijing’s AI ambitions.

The White House largely resisted calls for tougher oversight, as the administration sought to shield frequent Xi-Trump engagements and sustain the fragile trade truce negotiated in Busan, South Korea.

But with Huang — who aggressively lobbied to loosen those restrictions — now embroiled in an alleged espionage scandal, the fallout has refocused Congressional pressure on the administration to reverse course and impose tighter controls.

Lawmakers on Monday demanded an investigation and summoned Huang for a closed-door briefing on November 18.

“I’m pushing to investigate Jensen Huang and Nvidia to determine whether our national security was compromised,” Democratic Senator Chris Coons, who is also part of the Senate Foreign Relations Committee, wrote on social media.

However, analysts say Trump could still ignore the pressure to preserve his personal ties with Xi.

“Congress can only do so much to force his hand,” said Ali Wyne, senior research and advocacy adviser at the International Crisis Group.

“Trump has largely ignored its counsel to date, and he has given every indication that he intends to continue focusing on burnishing his rapport with Xi,” Wyne said.

Bresnick believed the scandal would give Democrats further impetus to tighten export control restrictions again, with Trump’s response closely watched.

“It’ll be interesting to see how that works and if Trump is going to veto any sort of harsher export control measures and whether there will be enough bipartisan pushback to overwhelm that veto,” he added.

Hilton Root, a professor of public policy at George Mason University, argued that while Congress has “substantial power,” it operates through “investigation and legislation.”

“In the immediate term, Congress’s strongest leverage may be to establish a public record of failures that makes continued approvals politically difficult,” he added.

As pressure mounts, Trump has publicly defended Huang, calling him an “honorable guy” who has “done such an incredible job.”

Trump said: “I asked him that question: Did you have any idea that she was a spy? He said I had no idea that she was a spy, and I really believe him.”

Huang remains influential figure in U.S.-China technology race

Huang has emerged as a key figure in the U.S.-China technology engagement. In May, he was invited at the last minute to join Trump for his trip to Beijing to visit Xi.

He travelled with the president on Air Force One to China as part of the U.S.’ high-profile tech delegation. The summit marked the first visit by a U.S. president in nearly a decade.

Additionally, when Xi visited the U.S. in September, Huang and his wife Lori were invited to the White House state dinner and given a prime seat at the table with both Xi and Trump.

Trump said on Sunday he would still invite the Nvidia CEO on his coming trip to Asia, adding: “I’d certainly take him.”

Trump is scheduled to travel to the Philippines from November 16 to 18 to attend the Association of Southeast Asian Nations summit.

He will then visit Shenzhen for the APEC meetings, where he is due to hold his third bilateral meeting of the year with Xi.

“It doesn’t seem like this [scandal] is affecting President Trump’s confidence in Jensen Huang,” Mazzocco said.

Bresnick predicts that Trump’s view on Huang could change over time, depending on what comes next.

“I assume people on his staff will be trying to pry him away from Huang. The way that I see Trump making decisions is that when things get too toxic, he will finally distance himself,” said Bresnick.

“That could happen as we go forward here, and as investigations reveal other things, we could see Trump say, OK, maybe it’s politically too costly to align myself with this guy.”

Read the article at SCMP.