Nvidia Spy Scandal Revives Push to Put China Chip Curbs in Defense Bill

Congress is now more likely to pass legislation restricting China's access to AI chips, lawmakers and advocates told Reuters, after reports that Nvidia CEO Jensen Huang had a relationship with a woman U.S. officials suspect of working for Chinese intelligence. Three chip measures sit in the Senate's fiscal 2027 National Defense Authorization Act package: the AI Overwatch Act, the Chip Security Act and the MATCH Act.

House Democratic leader Hakeem Jeffries said Monday, Nov. 9, that he "strongly supports" China chip restrictions in the final defense bill, after a classified briefing for congressional leaders. Sens. Elizabeth Warren and Jim Banks said Huang's confirmed relationship with a suspected spy "makes these national security concerns even more urgent" and urged passage of the AI Overwatch Act. Nvidia declined to comment and says it complies with export laws.

Huang has admitted being unfaithful to his wife. Nvidia's board is investigating whether he was the target of a foreign intelligence effort. The board says it has "no reason to believe that either national security or NVIDIA secrets were compromised." The woman, former Megaspeed executive Alice Huang, no relation, has not been charged. China's foreign ministry calls the spying allegation "unsubstantiated."

What would the three bills do?

The House Foreign Affairs Committee advanced all three measures earlier this year. They now sit in the Senate NDAA manager's package.

• AI Overwatch Act. Introduced by Foreign Affairs Chairman Brian Mast, it would treat AI chip sales to adversary nations like arms sales. Commerce must notify the House Foreign Affairs and Senate Banking committees at least 30 days before licensing chips such as Nvidia's H200 or AMD's MI325X. Congress could block a sale by joint resolution. Blackwell-class chips would face mandatory denial. The House text would also end existing licenses for covered exports.
• Chip Security Act. Requires companies to track their chips to combat smuggling. Sponsors Bill Foster and Bill Huizenga passed it out of committee unanimously. "It's time to get it across the finish line," Foster said.
• MATCH Act. Pushes U.S. allies to restrict more chipmaking equipment sales to China.

Congress has traveled this road before. The GAIN AI Act passed the Senate in last year's defense bill but was dropped from the final version after lobbying by the White House and Nvidia, Lawfare reported. Its sponsors included Banks, Warren and Chris Coons.

Who stands in the way?

A former congressional staffer who dealt with Nvidia over several months told Reuters the company is the biggest opponent of the Chip Security and AI Overwatch Acts. The Information Technology Industry Council, which counts Nvidia as a member, opposes the measures on competitiveness and export-control grounds. Nvidia had argued no smuggling was occurring until Justice Department indictments last year.

The White House is the bigger obstacle, said Chris MacKenzie of Americans for Responsible Innovation, a nonprofit backing the bills. The Information reported White House officials shared feedback with congressional staff on the measures in late October. The White House did not comment.

President Donald Trump has defended Huang, calling him "an amazing guy" and saying Huang told him he did not know the woman was a spy, Semafor reported. Trump said he expects Xi Jinping to raise the matter when they meet next week in Shenzhen. Semafor's Brendan Ruberry wrote the scandal strengthens China hawks sidelined by a White House willing to deal with Beijing. Senate Majority Leader John Thune spoke generally about national security threats; House Speaker Mike Johnson said Congress is "still gathering information."

Who holds the gavels in January?

If the provisions are dropped again, they return to a Democratic-run Congress from Jan. 3. Coons, expected to chair Senate Foreign Relations, said "Congress will investigate and get answers." Warren is expected to chair Senate Banking, one of two committees notified under the AI Overwatch Act. Richard Blumenthal wants a Senate investigation and called the matter "also a potential corruption issue." Jeffries, the presumptive speaker, wants a full briefing on Nvidia.

House Republican chairmen asked Huang on Nov. 5 for a closed-door briefing on Nov. 18. Senate Intelligence Democrat Mark Warner wants more facts before deciding whether Huang should testify.

How much Nvidia revenue is at stake?

The near-term exposure is small. Nvidia's latest 10-Q says licenses granted from February let it ship "small amounts" of H200s to specific Chinese customers, but Beijing restricted purchases and Nvidia made only a fraction of allowed shipments, under 1% of data center revenue in the quarter ended July 26. Nvidia took a $0.4 billion charge for excess H200 inventory and purchase obligations in the first half of the fiscal year. About 600,000 H200s sit in Hong Kong awaiting Beijing's approval.

China-billed revenue, booked by customer headquarters, reached $7.9 billion in the July quarter, 8.2% of total, against 21.9% in the quarter ended April 27, 2025. Baird told clients the U.S. will likely pull Nvidia's H200 license for China-based customers, CNBC reported. A congressional veto under the AI Overwatch Act would make every future H200-class license a political fight.

The scandal has also drawn scrutiny to the licensing system itself. The New York Times reported Commerce cleared New Matrix, a Beijing firm tied to Entity-Listed Wise Road, to assemble H200 servers, and that a probe into whether Megaspeed diverted Nvidia chips was moved to the Justice Department after Nvidia's general counsel emailed investigators. Nvidia reports fiscal third-quarter results on Nov. 17, where any H200 license update lands.