Nvidia CEO's admission puts China exposure back under the microscope

What happened

On Sunday, Jensen Huang acknowledged an affair with Alice Huang, a businesswoman the New York Times said was described as a spy in intelligence circulated inside the Trump administration during the spring. China dismissed that characterization as a smear.

According to Trump, he was "amazed" by the allegations, and Huang told him he "had no idea that she was a spy." He added the FBI is now examining the matter. "In 35 years, I haven't seen a chip CEO with this much direct influence on export policy," said Patrick Moorhead of Moor Insights & Strategy.

Why Washington is watching Nvidia's China ties

The revelations have intensified attention on Nvidia's past sales channels into China and Huang's role in U.S. export decisions. A key question is whether restricted parts flowed to Chinese customers through third parties such as Megaspeed, a Singapore-based Nvidia customer linked to Alice Huang. Megaspeed faces claims that it redirected its own inventory of restricted AI chips into China, which it denies, asserting that inspections found no violations.

A Commerce Department probe into Megaspeed was shifted to the Justice Department, the New York Times reported, after Nvidia's general counsel emailed Commerce seeking information about the inquiry. Separately, a House Select Committee launched a 2025 probe to determine if China's DeepSeek runs on Nvidia chips.

Three House committees have now requested private briefings with Huang. Democrats, set to take control of both chambers after last week's midterms, have said Congress will dig in and demand answers.

How Nvidia's China business shifted

Export controls announced in October 2022 under the Biden administration cut into Nvidia's sales in China. Before those curbs, China accounted for nearly one quarter of revenue. Nvidia redesigned products to fit the new rules, a sprint Huang described in 2023 as "a turbulent month or so," while insisting the company could still serve customers there.

After the Trump administration tightened restrictions further months before October 2025, Huang said that October, "We are 100% out of China." Even so, Nvidia maintained some activity in the region and in 2025 changed how it reports geography to classify by a customer's headquarters instead of billing location, while discontinuing separate disclosure of Singapore sales.

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The company later created the H20 for China after another round of tightening, but after reports emerged that Chinese model developer DeepSeek used restricted chips, the Trump administration curtailed H20 sales. Nvidia said it would take $5.5 billion in costs tied to canceled H20 orders. Despite forecasting "0% for China," Nvidia reported that in the last fiscal year about 9% of revenue originated in China, including Hong Kong.

In the most recent quarter, China accounted for 8%. Nvidia also said that, in the quarter that ended in July, shipments of H200s to China represented under 1% of data center revenue.

Policy moved around the same time. In December, Trump said Nvidia could ship H200s to China if the U.S. took a 25% cut of sales. By March, Huang told reporters Nvidia had "received purchase orders, and we're in the process of restarting our manufacturing." The U.S. authorized H200 sales to Alibaba, Tencent, ByteDance and others, but Beijing has kept caps on how many chips can enter the country, leaving China sales muted, Moorhead told CNBC.

One workaround remains: Chinese buyers can rent Nvidia computing from non-Chinese data centers abroad, such as in Europe, if those operators are outside the scope of export rules. Nvidia did not respond to a request for comment.

What this means for your portfolio

The through line is clear: export controls have redrawn Nvidia's China playbook, and fresh questions about intermediaries could drive even tighter rules. Moorhead expects more legislation, potentially giving Congress a say on export licenses or requiring tracking tech in chips to verify where they end up.

For investors, watch three pressure points. First, ongoing investigations - House committees on Huang, a prior House inquiry into DeepSeek's hardware, and the Megaspeed probe now with Justice. Second, the $5.5 billion cost hit from canceled H20 orders.

Third, the gap between Nvidia's reported China mix - about 9% last fiscal year and 8% in the latest quarter - and the higher exposure alleged by a short seller. Licenses, supply routes and demand in China will be the swing factors for Nvidia's data center trajectory.

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