The power struggle behind the Jensen Huang scandal - Asia Specific podcast, BBC World Service

The biggest story of the week that everyone has been talking about. You probably guessed it Jensen Huang, the boss of Nvidia, who is often described as the 'emperor of AI'. But Bill, he's been caught up in this huge scandal. Yeah, he's been caught having an affair and he's admitted to infidelity. And US authorities believe the woman he was having an affair. with is a Chinese spy. Now, this is a really big deal because Jensen Huang's company, Nvidia, makes. the world's best chips for things like phones and AI.

And he's very close to President Donald Trump, who makes decisions about what American chips can be sold to China. And so far, Donald Trump has pretty much defended Jensen Huang. I just know Jensen very well. I just think he's a very honorable man. I mean, he's great, he built a great company, American company. And I think he's a very honorable guy. And I feel very confident that he'll be in good shape. And now he's being investigated by both the FBI as well as.

his own company, Nvidia. So today we're asking, could this affair actually affect America's tech policy on China? I'm Mariko in Singapore and this is Asia Specific from the BBC World Service. Twice a week we bring you Asia Pacific stories unpacked by those who know them best. Bill Birtles, of course, is the Editor of the podcast. Welcome Back. Hello, Mariko. And we're joined by Tim Culpan, the founder of Taiwan.

based technology newsletter and media outlet, Culpium. And he spent many years previously at Bloomberg News covering the tech sector. in Asia, including the chip industry. Thank you so much for coming on the pod. It's great to be here. And can I just say, Tim, we've got a new set. This is the first episode with a new set because we're about to celebrate. our one year anniversary and our 100th episode as well. Well, congratulations. Thank you. And let's dive in, Bill.

Let's start with who exactly is Jensen Huang, and about the gist of this affair that everyone is talking about. Yeah, I think it's probably not an exaggeration Mariko, to say. that this particular tech tycoon is the most important business figure in. the very complicated China-US technology relationship and rivalry, because there are many others. You know, the heads of Apple or Amazon or people like Mark Zuckerberg that are. in e-commerce or social media platforms. They make hardware.

But China primarily has all these things itself. But when it comes to chips, semiconductors, you know, the little things powering devices, Nvidia, Jensen Huang's company, designs. the most powerful and advanced chips. And although China does have its own domestic chip industry, it's just not. at a level that Nvidia is at. So in this sense, he makes something that China currently does not have,

but Chinese companies want it. And for that reason, he is. a very valuable integral person in the general China-US tech relationship. And Tim, you've been based in Taiwan, where he's like the golden boy, isn't he, because he was born there. And of course, Mark Zuckerberg calls him the 'Taylor Swift of Tech'. Do you agree with Bill's description of. how famous Jensen Huang is in the industry? He is recently. You know, when I first started covering Jensen about 25, 26 years ago, you could fit all.

of the reporters who covered him around a breakfast table. Literally,they did. The PR would invite us in. and there'd be about six to eight people who would come and chat with him. But in more recent years, his keynote speeches did. very much rival a Taylor Swift concert, with the vibe with the crowd, standing room only, hard to get a ticket. Yeah, he's definitely a pop star. He's the golden boy. He's the prodigal son returned to Taiwan. And, people love him in Taiwan. Well, they did. Yeah, we want to get to that.

But before that, Bill, shall we break down this scandal? The actual reporting of this has been dripping out over the past couple of weeks. The New York Times came out with this big investigation saying. that he was close to a woman who was an executive at. a data center company called Megaspeed, the company based in Singapore. We've seen images subsequently come out, videos of them dining together during a meeting in Taiwan. And so a subsequent reporting in other outlets based in the US.

also suggested that this company, Megaspeed and various subsidiaries. with other names was allegedly involved in acquiring Nvidia chips. The sorts of chips that are at the level. that the US government has restricted when it comes to sale in China, and that these companies were involved in basically acquiring those chips. and funneling them to China in violation of those US export controls. And so the allegation is.

that Jensen Huang was having an affair with a woman who, according to figures within the US intelligence community, was a Chinese intelligence asset or a spy, basically. So this has come out. Jensen Huang, subsequently under a lot of pressure, has admitted to having an extramarital affair. He's apologised to his wife and his family. Now, he didn't specifically say it was with the woman who was identified. as Alice Huang in media reports,

the one that is alleged to be a Chinese spy. But that is the presumption that's the woman. And since then, there's been a great deal of pressure politically. in Washington, because some of the reporting has also alleged. that President Donald Trump was previously briefed. about these concerns, but didn't act on it. So that's the crux of the scandal. Tim, when Jensen was in Taiwan, he was photographed and filmed with Alice one, right?

So was it kind of an open secret that they might have been seeing each other? Were you surprised by this news? No. Not really. Look, there was just so much footage of those two together. And look, there was footage of of Jensen Huang doing dinner. with Che-Chia Wei, the chairman of TSMC, and with Liu Young-Way, the chairman of Foxconn and with many other people. But none of them were patting his back, rubbing his shoulder, holding his arm,

that kind of thing. That was the difference. That is a lot more than a business relationship. There is definitely more going on there, and it's not like there was one incident. It's not like it was unrequited affection. She patted him on the arm and then he said, don't do that. This this was going on over and over and over again. And this company at the heart of allegations, Megaspeed, that Bill mentioned, it's a data center company, right? And in a statement to Bloomberg News, the company did state that it was surprised by allegations.

that a former Megaspeed executive acted as a foreign intelligence asset. And of course, China has responded to this allegation as well. Right, Bill? Yeah. We should say that Megaspeed has said. that she's no longer the executive, that was a couple of years ago. China's government. Well, the Foreign Ministry has described the allegations as entirely groundless, that this woman, Alice Huang, was a spy or is a spy for China. So the dismissal from the Chinese Foreign Ministry, as you'd expect, has been pretty strong.

We've seen this sort of language, though, from China's government in the past. Whenever allegations of espionage or cyber intrusions are raised. You tend to get a pretty strong denial from China. And Tim, can you tell us more about this company, Megaspeed? It has officially denied these allegations that they were buying lots. of Nvidia chips that they were allegedly selling to possibly China. But can you tell us more about what role this company or.

how big of a role this company plays? Well, you know, I take the denials from. both Megaspeed and the Chinese government with a grain of salt. I mean, what do you expect them to say? Oops. You caught us. Yeah. Yeah. You're right. We were doing this. I mean, they're going to come out. with those responses just as Nvidia was four days ago, coming out and denying that there was an affair going on. So these denials carry just that much amount of weight. The thing about Megaspeed is yes, it's domiciled in Singapore. But, you know, hundreds, thousands of companies not actually.

in Singapore are domiciled in Singapore. So the place, the location of its registration really doesn't mean much. It is very handy for a company to be registered in Singapore. if it wants to buy a restricted product like a GPU from Nvidia, because, you know, if the registered address is is Beijing or Zhongnanhai. in Beijing, well, you're going to get rejected pretty quickly. Getting your hands on these chips is very, very important. And Megaspeed was a front company to get their hands on these chips,

to then shovel them to China for purposes. that were supposed to be banned. They're supposed to be restricted. But if you can open up a dummy company in Singapore, put some figureheads there and then say, hey, I'm a Singapore-based data centre company. Your chances of passing through the screening process are much higher. And clearly, in this case, that's what happened. Now, the reporting from The New York Times and others.

actually found that they visited these the registered addresses. and found nothing there. They were like empty shells of companies. So they really were just shell companies that were fronts. They weren't actual real operating businesses. If you are a company that is in the business. of selling these very expensive GPUs, these chips to companies like Megaspeed in Asia, how much control or monitoring do you think a company like Nvidia would have. over where the chips actually go and where they end up.

Well, Bill, when you close your eyes, it's easy to not see anything, right? And so if Nvidia wanted to know exactly where every single one of its chips went. and where it was installed and how it was being used, it could do so. There is tracking technology in the chips. and at the integrated computing system level, that can pretty much work out where it is and what it's being used for. It's possible. It's doable. Tracking that level of supply chain is not that difficult. But then you've got to want to do it.

And the question you really need to ask yourself is, why would Nvidia be incentivised to restrict the sale of its own product? What's the downside? Is there any legal ramifications of turning a blind eye. to ship chips being shipped to a company that might be on a US entity list? And so far, the answer, especially under the current US administration, is there's no downside. There's no ramifications. Yes, we'll play the song and dance and we'll pretend. that we're following blacklists and whitelists and all of that,

but there's no ramifications of, of actually kind of ignoring that or getting it wrong. And so Nvidia is incentivised to kind of not bother. I'm just wondering how this story was broken, firstly by The New York Times, followed by The Financial Times, but also the timing of it just after the midterm elections, where there's been that 'blue tsunami', where the Democratic Party won massively.

But I was also reading how Stephen Witt, who wrote a biography about Jensen, he told the BBC that he believes. Marco Rubio, the secretary of state, is behind the leak, though of course, Mr. Rubio has declined to comment on this. What do you think is going on in Washington about this story? There's two major policy positions. that Jensen has taken because he's been asked about it. One is restriction of selling of these chips to China. The other one is speeding up or slowing down the pace of AI development.

We term this pacing the frontier, after an essay that Anthropic founder. and chairman CEO Dario Amodei wrote a few months ago. Jensen is in favor of selling chips to China, at least the near best chips to China. And he's in favor of not slowing down, but. continuing at a quick pace. In US policy circles, in the intelligence community and the policy community. There is a pretty clear consensus.

that the US should restrict the sale of chips. There might be a little bit of debate about whether they should restrict. all chips or what level of chips, but generally there is a consensus. that it's not a good thing for US national interests to have these chips. in the hands of the US' largest rival. That isn't something that Jensen Huang disagrees with. Jensen Huang has been close to the president, and so the connection here is,

as the president has been watering down these rules. and softening the more hardened line that many, you know, had. They blame Jensen, and they've kind of got a good reason to blame Jensen. And I think what has happened is. people within the US intelligence and policy communities have just got fed up. They don't like what they're seeing. This memo was circulated a while ago last year, right?

So the president, as has been reported, was briefed that Jensen Huang was in a relationship. with someone they believed to be an intelligence asset of Beijing. The president knew about it, others knew about it, but nothing happened. So some time more recently, the same memo that was circulated within the white House. got circulated to the media, because I think they got fed up. and said, look, this is ridiculous. This is against national security.

This guy Jensen Huang is a risk to national security. And they decided to make that move to push their point. I mean, speaking of President Trump, he was asked whether he knew anything. about this allegation once again. So let's hear what he had to say. A lot of people have heard about it. And Jensen totally denies that he had. I asked him today because I did speak to him today just to see if he's feeling all right. How are you doing? And I asked him about that,

and he said he had absolutely no idea that the person in question was a spy. Are you concerned? 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. I'm just wondering, Tim, what do you think will happen next? You wrote a piece called Jensen Gate is much bigger than Jensen Huang. But, you know, I've been reading a lot about how Nvidia didn't really have. a Plan B, no clear succession plan in case something like this happened. So what will happen to Jensen, Huang and Nvidia, do you think?

To be honest, I don't know. I think that the the board will do this investigation thing. They should go through the process. Probably hire an outside law firm to, you know, go through the motions, tick the boxes, do the whole due diligence investigation thing. So the board has this really tough dilemma. How do you punish the guy? You can say, all right, Jensen, you've got to step down as CEO. But then who do they hand over to. I've identified this, I think. four Executive Vice Presidents, who maybe could step into the role.

One is the CFO and the other one is the general counsel. So that's two people who probably wouldn't be the best fit to take over the company. Another one is essentially the head of global supply chain operations. Yeah, maybe. And the other one is more of. like a senior sales person, which, you know, possibly. I think what needs to happen and should happen, and I hope will happen is that through this process, the board understands that they do have this key man risk. They don't have a hit-by-the-bus scenario,

and they need to have in place. and enunciate it to the world, to shareholders. the succession plan. Who would possibly take over? What is the process if the current CEO was removed from their position. for whatever reason. Because this is a huge risk to the company. He's been running the company since he founded it almost 30-40 years. Tim, I wonder, will this Jensen Huang scandal lead to some sort of change,

do you think, in the chip export restrictions. that the United States has on Nvidia's products? I can't see it not leading to change. I just see no scenario where politically the whole situation continues as normal. But what's interesting is, so the Republicans have lost control. over both the Senate and the Congress, the House, but they're the more hawkish ones traditionally. And this is why I think there's been this factiousness and unease.

and even anger within the right wing, you know, the Republican Party, because they're the hawks and they've seen Trump turn very dovish. But traditionally, and certainly in the last few years, the Democrats have been more dovish towards China. And now they're in control and they're going to be in control not just of the House and the Senate, but the key committees that will, you know, have investigations. and call Jensen to to answer questions. and put forward policies and laws and regulations.

The Democrats are in control, but they're traditionally the doves. But, you know, it's not that clear cut because. one of the things that we have noticed about the US administrations. over the last few years is when Trump was in first time, he became very hawkish after, you know, eight years of Obama. And he came in really hard on China. And a lot of people thought. when Biden got in, he would roll all that back, but he didn't. In fact, the Democrats kind of held the line in being tough on China.

And then Trump came in again. And in a way, he's the one who's been softer. So it's a little confusing for a lot of policy analysts and journalists. and and executives to know exactly how it's going to play out. But I do think that the Democrats will want their pound. of flesh because they've just taken control. This mistake happened under the Republican watch. They want to hold Trump's feet to the fire. And I think it'll be really, really interesting.

to see how it plays out over the next six months. Donald Trump is coming back to Asia. He has been asked whether he would consider still taking Jensen Huang. on his trip. Is that going to happen, do you think Tim? Oh boy. I think that would be a terrible look for Jensen Huang. for his first public outing after being outed. as having an affair with a spy, a Chinese spy, right? Sleeping with the enemy, so to speak, to then pop up. in China. That would be tone deaf to the nth degree.

Jensengate, it's still unfolding. Thank you so much for coming on the pod. Tim and Bill. Yeah Mariko, thank you. Tim, thank you. There's a lot happening with this story. Obviously the FBI is now investigating. There's this big question we've mentioned it about whether. or not Donald Trump would take Jensen Huang to China. A lot to watch and particularly Tim, I think in Taiwan, people must be watching this very closely. Yeah. Thanks, guys. Look, this is a fascinating story.

And, you know, this is just the first chapter. Indeed. Thank you so much for joining us. You've been watching Asia Specific from the BBC World Service. with me, Mariko Oi in Singapore. If you have any thoughts or comments on what we covered in this episode. or any other stories from the region, please leave us a comment below. You can also get in touch with us on email asiaspecific@bbc.co.uk. and click like and subscribe so you never miss an episode. See you next time.