China calls Nvidia chief's spy link a smear

Nvidia shares dropped approximately 5% in pre-market trading on Monday, November 9, after the Chinese government dismissed allegations linking the company’s chief executive to a spy plot. The stock movement followed a statement from Beijing that labeled the spying claims as a smear campaign against China.

The controversy centers on Nvidia CEO Jensen Huang. According to a report by The New York Times, Huang told the Nvidia board that he had an intimate relationship with a business executive. U.S. intelligence agencies determined that this executive was gathering information for Beijing. Huang did not name the individual in the affair, but the report identified her as Alice Huang, a Chinese citizen who ran a company facing claims of smuggling advanced chips into China.

China had previously denied the specific details of the New York Times story. On Monday, Ministry of Foreign Affairs spokesperson Guo Jiakun addressed the issue directly. "The so-called Chinese spy allegation is unsubstantiated. It is nothing but smears against China," Guo Jiakun said.

Huang has been at the center of a dispute regarding the sale of advanced computer chips to China. U.S. tech restrictions aim to limit Beijing’s access to these technologies. Despite these rules, Huang pushed to loosen sales restrictions in recent years. He successfully lobbied U.S. President Donald Trump to allow Nvidia to sell H200 chips this year. He had also previously lobbied for the sale of less-advanced H20 chips designed for the Chinese market.

In an August filing, Nvidia stated that it sold only a small amount of chips to China. The company noted that such sales are restricted by the Chinese government. While the H200 models are not Nvidia's most cutting-edge products, they are still considered advanced. It remains unclear if Beijing will allow Chinese companies to purchase these chips in large numbers.

Nvidia announced on Sunday that it would launch an investigation into the case. George Chen, a partner at the Washington-based consultancy The Asia Group, noted the importance of evidence in this matter. "The key questions are whether he was aware of any espionage activities and whether any confidential or strategically sensitive information was compromised," Chen said. "Those questions require evidence rather than speculation."

Chinese state media outlets have largely echoed the government's official line. Some commentators suggested the New York Times report was aimed at destabilizing U.S.-China relations. The state-owned Global Times stated, "Whenever China-US relations begin to improve, there are often those firing shots from the shadows."