Trump already knew about Nvidia espionage last year, 'The Netherlands can play this tactically'
It sounds like the plot of a James Bond movie: a spy who seduces a wealthy entrepreneur to extract company secrets on behalf of her government. The CEO of chip giant Nvidia appears to have fallen victim to this tactic. According to American intelligence agencies, he had an affair with a woman who worked for the Chinese secret service.
Whether she actually obtained sensitive information and passed it on to the Chinese authorities is uncertain. But the revelations do embarrass the American government. President Donald Trump was informed about possible espionage at the American billion-dollar company a year ago but did nothing with that information, writes The New York Times.
Allies of the US will wonder whether the Americans take their national security as seriously as they claim, experts say.
What is Nvidia?
The American technology company Nvidia is one of the main players in the field of artificial intelligence. The company designs advanced chips used to develop AI systems. Because demand for these chips has risen enormously, Nvidia has grown into one of the most valuable companies in the world. It has a market value of about 5 trillion dollars. This week, the market value dropped by more than 350 billion dollars.
The story revolves around the Taiwanese CEO of Nvidia, Jensen Huang, and the former executive of the Singaporean company Megaspeed, Alice Huang. Megaspeed is a customer of Nvidia and has purchased billions worth of chips from the American company in recent years. Two years ago, American authorities started an investigation into Megaspeed because the company was suspected of funneling Nvidia chips to China.
An export ban to China applies to the most advanced Nvidia chips. The US wants to maintain its lead in the global AI race and prevent the chips from being used for military purposes.
For that reason, the US also pressures allies to restrict the export of high-end technology to China. For example, advanced chip machines from the Dutch company ASML. Last summer, Minister of Foreign Trade Sjoerd Sjoerdsma traveled to Washington to urge the withdrawal of these measures.
'The Netherlands cannot secure ASML'
The Nvidia affair gives the Netherlands extra ammunition to oppose these rules, says Sanne van der Lugt. She is a China researcher at the Leiden Asia Centre and specializes in Chinese technological developments.
"The American government has been saying for years: the Dutch cannot secure such a large and strategic company as ASML at all. The Americans try to take control by imposing measures. This Nvidia affair is a perfect argument for the Netherlands to say: who says you can secure your companies?"
That Trump did not intervene after the warning about possible espionage at Nvidia, analysts say, has everything to do with Nvidia's value to the American economy. The American president would not want to endanger chip sales.
Moreover, Trump himself eased the export rules for Nvidia chips to China last year. The company was allowed to sell older chips to China again, and in return, the American government received a quarter of the proceeds. The Trump administration thus also has an interest in ensuring the sales are not disrupted.
"Trump has a very close relationship with Huang," says Mara Hvistendahl, journalist at The New York Times. She was involved in the newspaper's investigation into the espionage case. According to her, Huang's relationship with the president makes him a very attractive target for espionage. "Aside from the economic value of information about Nvidia, he may also be aware of policy plans."
US correspondent Sjoerd den Daas:
"That Trump did nothing with this dossier raises many questions. The investigation into Megaspeed was transferred from the Department of Commerce to the Department of Justice. That is perhaps the most politicized department in the US. Trump seems to have a strong influence there.
Jensen Huang was still allowed to fly on Air Force One to China this year. At that time, Trump was already aware of the suspicions. That says something about Trump's judgment, the man who says he acts on instinct and especially likes to make deals. The Republicans are not yet focusing their arrows so much on Trump, but mainly on Huang. He must come to Congress and explain what happened."