The US is winning the AI race, but the Jensen Huang scandal at Nvidia could put its lead at risk

This analysis by The Verge, written by Robert Hart and published on November 10, 2026, examines the fallout from the scandal involving Nvidia CEO Jensen Huang. Huang admitted to having an affair with a woman suspected of being a Chinese spy. According to the article, her espionage activities were known to US intelligence and even to President Donald Trump. Several experts interviewed by the outlet argue that the case goes far beyond the personal or reputational. It could upend the entire US AI industry, affect national security and erode the country's fragile technological lead over China.

The piece starts from Nvidia's position. It is the undisputed leader in advanced chips, one of the industry's scarcest resources. Building AI models takes talent, energy, capital and data, but high-end chips are a fundamental ingredient. Only a handful of companies can design or manufacture them at the technological frontier. That makes Nvidia the gatekeeper of a bottleneck in global AI development. Meta, Anthropic and OpenAI are trying to develop their own chips, partly to reduce their dependence on Nvidia, while spending billions to secure more compute.

For China, the main US rival at the AI frontier, that bottleneck is even tighter. Washington has restricted sales of the most advanced AI chips to China to slow its progress. China is believed to be a few months behind the US. Beijing has made developing domestic alternatives a strategic priority, although its companies still trail Nvidia at the cutting edge. Meanwhile, a black market for restricted Nvidia chips has emerged. According to the experts, China could exploit access to Nvidia to accelerate its own development or to hinder that of the US.

The most obvious gain for Beijing would be getting more Nvidia chips, explains Emily Kilcrease, senior fellow and director of the energy, economics and security program at the think tank CNAS. China has advantages in other parts of the race, such as abundant energy and a strong open-weight model ecosystem. But without Nvidia's latest chips it "can't close the gap" with US frontier capabilities. With those chips, Kilcrease says, the US lead "could disappear in a matter of weeks or months."

The article notes that it is unclear how successful the alleged espionage operation has been. There is no public evidence that Huang helped steer restricted chips to China or that sensitive information was obtained from him. It is reported, however, that companies linked to the alleged spy, Alice Huang (no relation to Jensen), facilitated at least $7 billion in Nvidia chip sales to China. Kyle Chan, a researcher at Brookings, points to another concern for the US industry. Companies with alleged ties to China may have had priority access to Nvidia's latest GPUs. "At a time of chip scarcity," that would make it much harder for American companies to get them.

The article also recalls that Huang is a prominent critic of US restrictions on chip sales and that Nvidia spends formidable sums on lobbying in Washington. Last year it won White House approval to begin exporting its H200 GPUs to "approved customers" in China and other countries. He also has the ear of Trump and other world leaders, giving him significant influence over policy decisions.

Hardware is not the only thing of value. Sunny Cheung, a China studies fellow at the Jamestown Foundation, considers it "very narrow" to focus on whether someone managed to steal Nvidia's trade secrets. He adds that he hopes Huang would not be so reckless as to hand the blueprints for upcoming chips to an alleged Chinese intelligence agent. Instead, his relationships with other tech executives, senior policymakers and Trump himself give him an unusually intimate view of how some of the most powerful people in the US think and plan. Beijing could use information about US companies' infrastructure expansion plans, their compute needs or industry trends to guide its investments and industrial strategy. That information could also reveal how the White House thinks about export controls, or what Silicon Valley executives privately think about China and Taiwan. Its intelligence value would extend beyond AI.

The flip side is the destabilization of Nvidia. The company is closely tied to the identity and reputation of its charismatic CEO. Huang co-founded it more than three decades ago and has since served as its president, CEO and board member, although he holds a relatively small stake. Nvidia shares have fallen since the affair came to light. Cheung warns that when much of the US AI infrastructure depends on a single company, any serious security or governance problem there creates uncertainty across the entire sector. Kilcrease agrees, warning that the scandal could "destabilize" the company. The ongoing investigations, she says, "will consume an immense amount of bandwidth" internally and could weigh on Nvidia's day-to-day operations.

If those distractions affect its ability to execute (slower decisions, delays in launches or in the allocation of already scarce chips), the consequences would quickly reach customers. AI labs and hyperscalers such as OpenAI and Anthropic "could have a real problem accessing the enormous amount of compute they need," according to Kilcrease. Switching to other hardware, she adds, "takes time." Because experts believe China is very close behind the US, even modest delays by American companies could help Chinese rivals narrow the gap. The article acknowledges that it will be hard to gauge how far the turbulence will spread across the rest of the industry, and that Nvidia will almost certainly face further disruption as the investigations progress.

The piece also points to a possible irony for Beijing. With the case now public, the scandal could backfire. "The odds of Congress passing an AI chip control law have skyrocketed," Kilcrease says.

Two editorial notes. The article includes a correction: one sentence had mistakenly attributed leadership in advanced chips to Anthropic, when it is Nvidia. In addition, the page's links on coverage of the case include recent headlines, for example that Nvidia is reportedly preparing to fire Huang and that the affair has reportedly unsettled officials in Taiwan and the US cabinet. Only the headlines of these stories were included in the material received, so they should be treated as reported and as yet unconfirmed information.