China's AI Firms Fear Jensen Huang's Turmoil Could Cut Off Their Nvidia Lifeline — Now They're Hunting for Computing Power Abroad: Report

Chinese AI firms are reportedly seeking access to Nvidia Corp. (NASDAQ: NVDA)-equipped data centers beyond China’s borders, looking to secure computing resources amid concerns that a controversy surrounding CEO Jensen Huang could prompt U.S. authorities to impose stricter limits on their ability to remotely access advanced chips.

Chinese AI Firms Seek Nvidia Computing Power Abroad

One of China’s leading cloud service providers has held internal discussions about securing access to Nvidia chips hosted overseas, while other firms have approached data-center operators to explore reserving computing capacity, Reuters reported, citing people with knowledge of the matter. The people declined to name the cloud provider, citing the sensitive nature of the discussions.

Smaller AI research firms are also exploring comparable arrangements, with some considering reaching out to large computing-capacity rental providers operating across Southeast Asia, the report added.

The companies are concerned that the controversy involving Huang could strengthen support for the Remote Access Security Act (RASA), proposed U.S. legislation that would authorize the Commerce Department to oversee remote, cloud-based access to restricted technologies. The bill cleared the House of Representatives in January and is now awaiting consideration in the Senate, according to the report.

The developments highlight Chinese tech firms’ concerns that Washington could close a loophole in its export controls. Although the U.S. restricts sales of Nvidia’s most advanced AI chips to China, Chinese firms can still access them by renting computing capacity at overseas data centers. Nvidia’s advanced chips power large AI models behind chatbots and other generative AI tools. Limiting overseas cloud access could make it harder for Chinese developers to obtain high-end computing power without directly importing the processors.

Nvidia and the Commerce Department and its Bureau of Industry and Security did not immediately respond to Benzinga’s request for comment.

A day ago, it was reported that Northwestern Polytechnical University, an institution with longstanding connections to China’s People’s Liberation Army (PLA), bought Nvidia’s advanced H200 AI chips last month, despite being included on a U.S. export blacklist. The purchase points to potential weaknesses in Washington’s efforts to restrict China’s access to cutting-edge technology.

Turmoil at Nvidia Escalates

Shares of Nvidia fell about 9% after hours on Wednesday after it was reported that Huang had an alleged affair with Nvidia Vice President of Health Care Kimberly Powell, who reports to him. Powell has abruptly withdrawn from a major health summit in Washington, D.C., hours after the report surfaced. Last month, it was reported that U.S. officials determined that Alice Huang, also known as Huang Le, was a Chinese intelligence asset who allegedly funneled information to Beijing while maintaining ties to Huang. Nvidia launched an independent investigation into whether foreign intelligence operatives had targeted its CEO. Later, Huang separately acknowledged marital infidelity in a message to employees.

A report from The New York Times late Wednesday noted that Nvidia’s board is now preparing to remove Huang after learning he had two extramarital affairs.

Jim Cramer expressed shock over reports that Nvidia is preparing to remove Huang, while Elon Musk backed calls for shareholders to have a say in the CEO’s future as the allegations roil investors.

Broadcom Inc. (NASDAQ:AVGO) and Advanced Micro Devices Inc. (NASDAQ:AMD) shares each rose more than 2% in extended trading Wednesday as fresh turmoil surrounding Huang sent investors toward rival chipmakers.

Shares of Nvidia closed 2.92% higher at $173.73 on Wednesday, but the stock tumbled 8.61% after-hours. Year-to-date, the shares have declined 6.85%.

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