The scandal surrounding Nvidia and its CEO Jensen Huang poses a threat to the entire American artificial intelligence industry and plays into the hands of Chinese competitors, experts say. But the actions of Chinese companies hardly resemble jubilation – they have become more active in trying to rent computing power on Nvidia equipment, fearing that Washington will tighten restrictions.
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Jensen Huang admitted that he had an extramarital relationship with Singaporean businesswoman Alice Huang, who is suspected of working for Chinese intelligence services. In addition, some former Nvidia employees said that the head of the company was also in a relationship with his subordinate – Nvidia Vice President of Healthcare Kimberly Powell. Amid the scandal, Nvidia shares plummeted 8%, and the company’s market value fell by about $300 billion. This is more than the capitalization of the world’s largest investment banks Morgan Stanley and Goldman Sachs.
Nvidia’s board of directors may hold a meeting in the near future, and it is possible that Jensen Huang will leave his post as head of the company. There is no obvious successor, and given Nvidia’s dominant share of the global AI accelerator market, the U.S. position in the industry is in danger of faltering. It is logical to assume that the main beneficiary of the scandal is China, which continues to actively invest in AI technologies, experts remind, but there seems to be no simple answer to this question.
Chinese AI companies are increasingly trying to rent computing power based on Nvidia AI accelerators outside of China. They worry that the scandal surrounding Nvidia’s CEO could prompt Washington to tighten restrictions on the remote use of advanced equipment, thereby closing a loophole in export control rules. One of China’s major cloud providers was discussing the possibility of securing access to overseas capacity based on Nvidia chips; some other companies have already contacted data center operators to book such resources. Small AI labs are also considering similar steps, including turning to large providers in Southeast Asia.
One of the risk factors is the adoption of the Remote Access Security Act (RASA). This document may give the US Department of Commerce the authority to regulate remote cloud access to technologies subject to export restrictions. The House of Representatives approved it back in January with a vote of 369 to 22; it now awaits consideration in the Senate.
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