Chinese AI firms rush to secure Nvidia chip capacity as spy scandal stirs fear of US curbs

Chinese AI firms are rushing to secure Nvidia chip capacity outside of China due to fears that the scandal surrounding Nvidia's CEO, Jensen Huang, could result in stricter US restrictions on the remote use of advanced processors, according to three people familiar with the situation. Washington currently restricts the export of Nvidia's most advanced AI chips to China, but companies can access such processors remotely by renting computing power at overseas data centers.

A major Chinese cloud provider has reportedly discussed internally the possibility of locking in overseas Nvidia chip capacity, while some companies have contacted data-center operators about reserving it. Smaller AI labs are also considering similar steps, including approaching major providers of rented computing power in Southeast Asia.

The controversy surrounding Huang could bolster support for the Remote Access Security Act (RASA), a US bill that would grant the Commerce Department authority to regulate remote, cloud-based access to restricted technology. The bill was passed by the House of Representatives in January and is awaiting Senate action. Nvidia's Huang admitted to infidelity, reportedly with Alice Huang, a former executive at Megaspeed, a Singapore-based cloud-computing company suspected of helping Chinese customers obtain advanced Nvidia chips.

Megaspeed has denied allegations of illegally diverting chips to China and has cooperated with US inspections. Shares of Chinese AI companies dropped significantly in Hong Kong amid concerns over potential tighter US restrictions on access to advanced chips.