How Much Will Jensen Huang's Scandal Ultimately Cost?

Other companies such as Google and AMD have tried to make chips that can compete with Nvidia for speed and efficiency, however neither has been able to displace Nvidia from its dominance of the AI market.

As a consequence, Nvidia has played a key role in the US government's strategy to stall China's development of AI. Sales of Nvidia's most powerful chips to China have been restricted since 2022 – though the restrictions were somewhat relaxed last year.

However, Chinese enterprises have repeatedly tested the boundaries of US sanctions. Southeast Asian companies including Megaspeed, Alice Huang's former employer, have been accused of buying up Nvidia chips and exporting them into China.

Jensen Huang has lobbied intently for a relaxation of US chip export restrictions, which is being seen in a new light after the revelation of his relationship with Alice Huang.

Trade records indicate over US$3 billion in chips crossed from Singapore to China in a single year, alongside similar volumes from Malaysia.

Selling access to banned Nvidia chips to Chinese companies has also become a growth industry.

Nvidia's value has soared with the AI boom. However, its share price has fallen after the disclosure of the Huang incident, with some analysts asking whether the company propped up sales figures by ignoring sanctions. It has also been reported that an Nvidia executive leaned on US officials to halt an investigation into the firm's relationship with Megaspeed.

Nvidia's share price tumbled after the affair was revealed.

Now the company is reportedly under criminal investigation. At the same time, US technology regulators are mobilising, with Congress requesting Jensen Huang explain his interactions with Alice Huang, and how Nvidia protects itself against foreign espionage.

If Nvidia is forced to guarantee its chips don't enter China, its sales pipeline may grind to a halt. And if Nvidia hits trouble, the financial impacts could be much wider.

The AI sector is notorious for the amount of circular financing going on – where companies invest in their own suppliers or customers. Nvidia is a key player in this loop.

Investors are already fretting over whether the enormous amounts of money sunk into AI can ever return profits.

While leading AI model builders Anthropic and OpenAI are moving toward public listings or fresh funding rounds, both face harsh reality checks.