China’s access to some Nvidia chips in doubt as curbs gain traction in US Congress

Chinese AI shares plunged on Friday amid concerns over potential restrictions on Nvidia chips for the country, following the sudden departure of Jensen Huang, the company's CEO. The controversy stemmed from a spy scandal involving Huang's alleged romantic relationship with a Chinese businesswoman suspected of espionage for Beijing. This development comes as US Congress grapples with the growing consensus to tighten chip export controls to China, following the whistleblower allegations against Huang.

Lawmakers from both parties have been pushing for stricter regulations on China's access to advanced AI chips, which are crucial to China's rapidly growing AI industry. The US House Speaker Mike Johnson stated that there was a consensus in Congress to limit chip exports to China, citing the need to protect US technology from falling into Chinese hands.

Huang stepped down after the scandal broke, raising questions about the future of Nvidia's operations in China. The company's advanced AI chips are widely used in the development of cutting-edge AI models, making them vital to the US-China competition in artificial intelligence. In response to the allegations, investors dumped shares in Chinese AI companies and hardware suppliers, with Z.AI and MiniMax Group shares falling by 12% and 8.4%, respectively.

The controversy has reignited calls for stronger export policies to prevent China from obtaining access to Nvidia chips remotely. Congressional Republicans have been pushing for additional restrictions on chip exports in the annual defense authorization bill, which typically enjoys bipartisan support. These proposed bills include the AI Overwatch Act, Chip Security Act, Match Act, and Remote Access Security Act, which aim to strengthen US oversight of advanced AI chip exports to China.