SCOTT SIMON, HOST:
Nvidia is in a crisis. Jensen Huang, its CEO and co-founder, resigned after allegations of having an improper relationship, including with a woman who was suspected of spying for China. Nvidia, of course, is one of the most valuable companies in the world and one of several tech giants who drive a disproportionate share of U.S. stock market gains and could have ceded some leverage to Chinese competitors in the contest for AI superiority. Lizzi C. Lee is a fellow on the Chinese economy at the Asia Society. She joins us. Thanks so much for being with us.
LIZZI C LEE: Great to be here.
SIMON: The suspected spy is Alice Huang - no relation - an executive at a Singapore-based data center company called Megaspeed. Sounds like there are two concerns here. One is that she might have given valuable information to the Chinese, and also, the valuable chips she may have funneled to China. Is that accurate?
LEE: Right. So I think there are several issues here, and we need to be separate. As you mentioned, you know, Alice Huang is this Chinese businesswoman who actually started her career in television before moving into finance and then technology investment, and that's quite an unusual career path. I think what's really interesting is that her business connections to Nvidia actually go back well before her current reported relationship with Jensen Huang through their earlier investment network.
She was involved in the Chinese gaming companies, including 7Road, which eventually became connected to Megaspeed. And she also has a history of structuring, brokering deals through offshore companies. So, you know, U.S. intelligence reportedly suspects that she had connections to China's intelligence services. Currently, there's no solid evidence on that. Beijing denies that, unsurprisingly. And the allegation hasn't been publicly proven. So I would be careful about treating her as an, you know, intelligence operative.
But Megaspeed is a different story. It's a Singapore-based AI cloud company that, as I mentioned, grew out of the Chinese gaming firm 7Road, which Alice Huang had connections to. What's really interesting is that Megaspeed, in 2023, had its ownership passed through a British Virgin Islands company controlled by Alice Huang before being transferred to another Singapore company, and then it expanded at a really extraordinary pace, buying more than 4.6 billion of Nvidia hardware in roughly two years. But its reported assets, you know, actually went from about 33 million just a year before to 3 billion in one year.
And its business was essentially to provide computing power through overseas data centers. And that certainly matters because Chinese companies unable to buy certain advanced Nvidia chips directly could potentially rent the same computing power from facilities in Southeast Asia.
SIMON: Is there concern that the huge - sounds certainly like a huge growth in assets is somehow connected to the Chinese government?
LEE: Well, so I think there are several concerns here. First is, who was actually behind Megaspeed. As I mentioned, the ownership actually changed several times. But, you know, the name on corporate records, as you know, doesn't necessarily tell you who actually controls the business. I think, currently, investigators are trying to establish whether Alice Huang, other Chinese investors are continuing to exercise influence after the ownership transfer to Singapore. And there's also a major financing question. Where did the money come from, and who ultimately benefit? So that's one concern.
Another concern, you know, is did Megaspeed actually receive unusual treatment or potentially, you know, illegal treatment from Nvidia? So this is a relatively obscure company that became one of Nvidia's largest Southeast Asian customers almost overnight. So how did they actually secure billions of dollars in chips?
And the third concern, as you alluded to, is did Nvidia chips end up in China, or were Chinese customers using them remotely? This is actually a critical distinction. If restricted chips were secretly shipped into China, that could violate export control. But if the chips stayed in the Malaysia data center and Chinese companies - private companies rented computing power over the internet, that's a different legal situation in policy. And that's a...
SIMON: Lizzi C. Lee of the Asia Society. Thanks so much.
LEE: Great to chat. Transcript provided by NPR, Copyright NPR.
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