The Chinese Connection

Skirting export controls: Bloomberg is reporting that Alice Huang—the woman at the center of the Jensen Huang scandal, with whom he had an affair and who is believed by U.S. intelligence officials to be a Chinese spy—possibly played a part in smuggling AI chips that were then installed at a data center in Shanghai.

“Some of the servers were originally sold to Aperia Cloud Services, an official Nvidia Cloud Partner headquartered in Singapore, according to a person familiar with the matter, who requested anonymity to discuss a sensitive topic,” reports Bloomberg. “But instead of staying in the island nation, the documents show, the hardware wound up in the hands of a Chinese company Alice founded, at a sprawling AI facility in Shanghai. That project has several ties to Alice, including that Megaspeed—which she was high up at—used a rendering of the data center in a 2024 investor presentation.”

“Specifically, Aperia purchased 22 servers from Dell Technologies Inc. that contained Nvidia’s H800 chips,” continues Bloomberg, “which Washington restricted from sale to China in 2023. Bloomberg provided serial numbers of those servers to a person familiar with the transaction, who confirmed that Aperia was Dell’s customer.”

This appears to be in violation of U.S. trade restrictions. The Trump administration has claimed to be pretty aggressive with making sure U.S.-made chips, such as those manufactured by Nvidia, don’t end up powering Chinese AI, but the reality is much more complicated.

Some say Commerce Secretary Howard Lutnick has gone easy on Nvidia. Lutnick “has frequently clashed with top officials over how to regulate sales of advanced technology, particularly Nvidia’s chip sales to Asia,” reports The New York Times. “That has drawn accusations from others in the administration and in Congress that the Commerce Department has become too cozy with Nvidia and its co-founder, Jensen Huang, and failed to adequately police the firm’s chip sales to China, in particular.”

Nvidia has apparently been very cozy with the Commerce Department:

“Within the Commerce Department, Nvidia is treated differently than other firms, current and former officials say, with its issues given high priority and sent through specific channels.

Mr. Lutnick frequently calls and messages with Mr. Huang, and the department prepares carefully for their private meetings together in Mr. Lutnick’s fifth floor office. All Nvidia matters are routed through Jeff Kessler, a top deputy to Mr. Lutnick, who is said to rarely take any significant action without the commerce secretary’s approval.

Nvidia’s general counsel has also been given direct access to shape new rules, including leaving comments in draft regulations affecting the company.

Nvidia’s general counsel, Tim Teter, is known within the Commerce Department for his aggressive outreach. An inquiry inside the agency into whether Megaspeed was smuggling Nvidia chips into China was shut down late last year and transferred to the Justice Department after Mr. Teter reached out directly to Commerce Department investigators, invoking Mr. Kessler’s name in doing so.”

It’s likely more will come out regarding the Trump administration’s willingness to look past issues with Jensen Huang—and the degree to which it’s affected the AI race against China.

Scenes from New York: A building in Flatbush, Brooklyn, randomly collapsed, leaving eight dead.

“Firefighters and paramedics swarmed the scene. Firefighters poured into the pit where the excavation had been taking place, hauling aside brick and concrete in search of victims and survivors. Ambulances parked nearby, awaiting patients to deliver to hospitals. Soon, drones would hover over the scene—some operated by emergency workers, others by news crews,” reported The New York Times. “A fire truck that had parked on Flatbush extended its long ladder directly into the apartments in the neighboring building that had been exposed to the open air — a jarring sight, like the cross-section of a dollhouse.”

• “Anthropic PBC‘s initial public offering has drawn about six times the orders for the shares available, according to people familiar with the matter, as interest increases for potentially the biggest first-time share sale ever,” reports Bloomberg.
• “Operators of small-town water stations locked out of control panels across the Midwest. Networks on two Texas-bound energy tankers breached as they crossed into the Atlantic Ocean. Hundreds of refrigerators in European grocery stores ratcheted up to a blistering 120 degrees Fahrenheit,” reports The Wall Street Journal. “Three cyberattacks since this summer with real-world impacts and one main suspect: Iranian hackers.”
• Was Supreme Court Justice Elena Kagan totally wrong? asks Charles Lane at The Washington Post.
• “Dutch Prime Minister Rob ​Jetten will try to save his minority government from collapse in a meeting with coalition ‌partners on Friday, after a heated debate over wealth taxes exposed deep divisions a day earlier,” reports Reuters. “Jetten’s three-party coalition threatened to fall apart less than 9 months after its installation, as parties bickered over a deal with the left-wing opposition to support a ​2027 tax plan in exchange for a slight increase of wealth taxes.”

The post The Chinese Connection appeared first on Reason Magazine.