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How a Chinese Spy Got Inside Nvidia — Transcript

by Paper Billions · 3,213 words · 496 segments · language en · Watch on YouTube

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0:00In Singapore,
0:01the boss of the most valuable company on Earth is having dinner with a Chinese spy.
0:06He's Jensen Huang, who runs Nvidia.
0:08She's Alice Huang, no relation, and she runs one of his biggest customers.
0:13But here's the strange part.
0:14Somewhere nearby, American agents are taking pictures.
0:18They know exactly who she is.
0:20Jensen has no idea.
0:21To our customers!
0:24To friends.
0:25Under that table, her company is buying billions of dollars of his chips.
0:29The kind China isn't allowed to have.
0:31This is the story of how China got a spy into that seat, and who was watching.
0:37It starts with a phone call from Washington.
0:43But to see why that call mattered, you need to know who picked it up.
0:47Because the man in the leather jacket didn't start at the top.
0:50He started in a bathroom in Kentucky.
0:53Jensen's story begins in Taiwan.
0:55At nine, he and his older brother were put on a plane to relatives in America.
1:00To pay for a good school, his parents sold almost everything they owned.
1:04Oneida Baptist Institute.
1:06A boarding school in Kentucky.
1:08Very strict.
1:09Strict is good.
1:10It wasn't a fancy boarding school.
1:12It was a reform school for troubled kids,
1:15and the relatives had signed them up by mistake.
1:17His brother was sent to work the school's tobacco fields.
1:20Jensen got the bathrooms.
1:22A hundred teenage boys' worth, every single day.
1:25I just wished they would be a bit more careful.
1:28His roommate was seventeen, covered in tattoos and knife scars,
1:32and taped up from his latest fight.
1:34He was the toughest kid in the school.
1:36And he couldn't read.
1:37What's this say?
1:38I can teach you.
1:39Then I teach you the bench press.
1:42Deal.
1:42Decades later, Jensen gave that school two million dollars for a new building.
1:47It's called Huang Hall.
1:48The boy who cleaned its bathrooms put his name on the front door.
1:52At fifteen, he took the graveyard shift at Denny's.
1:55Dishes first.
1:56And then?
1:57Then busboy.
1:58Then, if you're lucky, waiter.
2:01And then?
2:03Then more dishes.
2:04And in nineteen ninety-three, he went back to Denny's.
2:07Not to work.
2:08To start a company.
2:09In a corner booth in East San Jose, Jensen and two engineer friends,
2:14Chris Malachowsky and Curtis Priem, sketched a chip for three-D graphics.
2:18He liked the place because it was quieter than home, and the coffee was cheap.
2:22Anything else, boys?
2:23A graphics chip.
2:24We have pancakes.
2:26Then three more coffees.
2:28Each founder put in two hundred dollars.
2:31Six hundred dollars, about the price of a used couch,
2:34to take on the biggest chip companies in the world.
2:37It nearly died.
2:38When its make-or-break chip finally shipped in nineteen ninety-seven,
2:42Nvidia had about one month of payroll left.
2:45The company's unofficial motto became
2:47Our company is thirty days from going out of business.
2:50So how long have we got?
2:52Thirty days.
2:54And if the new chip doesn't sell?
2:56Twenty-nine.
2:57It sold, about a million of them in four months.
3:00And here's the trick that later made it a giant.
3:03A normal computer chip is one brilliant chef cooking a whole wedding dinner,
3:07one plate at a time.
3:09Nvidia's chip is ten thousand line cooks,
3:12each flipping one pancake at the very same moment.
3:15For video games, that meant explosions.
3:18Then researchers noticed that artificial intelligence needs exactly that: millions
3:23of tiny sums, all at once.
3:25ChatGPT was trained on a supercomputer built
3:29from tens of thousands of Nvidia chips.
3:31And suddenly every AI company on Earth was standing in the same line.
3:35One of everything, please.
3:37Take a number.
3:38Forty thousand?
3:41That's your place in line.
3:42By twenty twenty-five,
3:43about eighty-six of every hundred dollars spent on AI chips went to Nvidia.
3:48In twenty twenty-three, Denny's put a plaque on the booth.
3:52It calls it "the booth that launched a
3:54one-trillion-dollar company." At the party,
3:56the boss of that company put on an apron, balanced ten plates up his arm,
4:01and served the tables.
4:02Still remember how?
4:03Dishes first.
4:04Two years later, Nvidia became the first company ever worth five trillion dollars.
4:10Every dollar the three of them put into that booth had become about eight billion.
4:14The kid who scrubbed the toilets in Kentucky now holds the key to artificial
4:18intelligence.
4:19And when he talks about who should be allowed
4:21to buy his chips, Washington listens.
4:24Every AI lab on Earth needs this man.
4:27Then so do we.
4:28That made him the one man China needed most.
4:33October, twenty twenty-two.
4:35Washington calls Nvidia.
4:37Your best AI chips can't be sold to China anymore.
4:40And the slower ones we made just for China?
4:43Those too.
4:44China.
4:45Seventeen billion dollars a year.
4:47Thirteen percent of everything we sell.
4:50Was.
4:50How many chips do we need?
4:52For a real AI?
4:53Tens of thousands.
4:55And one costs?
4:56About thirty thousand dollars.
4:58A new car, per chip.
5:00And how many can we buy?
5:02Zero.
5:02By Jensen's own account,
5:04Nvidia's share of China's market went from ninety-five percent to zero.
5:08And he told Washington so, every chance he got.
5:11They're nanoseconds behind us.
5:13We've got to go compete.
5:15So China couldn't buy the chips.
5:17But it could get close to the man who makes them,
5:19and who argues with Washington about who gets to buy them.
5:23That's a job for China's Ministry of State Security, the MSS.
5:27Picture the FBI and the CIA in one building.
5:31It doesn't crack the safe.
5:32It befriends the man with the key.
5:34Nobody outside Beijing has said when Alice Huang was recruited.
5:38But an American memo later wrote down her job.
5:41This man makes the chips.
5:43And Washington listens to him.
5:45So what do I steal?
5:47Nothing.
5:48You learn what he knows.
5:49You help him see things our way.
5:51Why would he even talk to me?
5:53Because you'll be his customer.
5:55And then?
5:56We make friends.
5:57The key belonged to one man.
5:59And that man likes everybody.
6:03In twenty twenty-three,
6:05a Chinese gaming and cloud company called Seven Road split off its business outside
6:10China, moved it to Singapore, and renamed it Megaspeed.
6:13The managing director was Alice Huang.
6:16We make phone games.
6:17Now we make supercomputers.
6:19Since when?
6:21Since Singapore.
6:23Address?
6:24Singapore.
6:24America trusts Singapore.
6:26Business?
6:27Cloud computing.
6:28A cloud company needs mountains of chips, and nobody asks why.
6:32And the chips go where?
6:34Data centers in Malaysia and Indonesia.
6:37Not one chip goes to China.
6:39Then how does China use them?
6:42It rents them.
6:43Imagine a country that isn't allowed to buy cars.
6:46So you buy the cars, park them just over the border,
6:50and rent out the keys by the hour.
6:51Chinese companies, Alibaba among them, rented time on the chips the same way,
6:56and the chips never entered China.
6:58Can we buy your chips?
7:00No.
7:01But you can rent them.
7:02By the hour?
7:03By the warehouse.
7:04At the end of twenty twenty-three,
7:06everything Megaspeed owned came to about thirty-three million dollars.
7:10A nice little company, and not one the boss of Nvidia had any reason to meet.
7:15So she went and found him.
7:19Jensen Huang isn't hard to meet.
7:21The former Denny's dishwasher now runs a company worth about four and a half
7:25trillion dollars, and he still treats every customer like a regular.
7:30As his spokesman later put it:
7:31Meetings with customers are part of a CEO's job; Jensen talks with thousands of
7:36customer executives every year.
7:37She was about to become one of those thousands.
7:40June, twenty twenty-four, in Taipei.
7:43The big chip show, Computex, has just ended,
7:46and Jensen goes for whiskey with people from the AI world.
7:49Someone takes photos.
7:50In them, right beside him, is Alice Huang.
7:53Who haven't I met?
7:54Alice.
7:55Megaspeed.
7:56Singapore.
7:57Singapore!
7:58What are you building?
7:59A cloud company.
8:00Something big.
8:02Then welcome to the table!
8:04Nobody looks at those photos twice.
8:06Later, someone will.
8:07That same month, at Megaspeed's Malaysian arm, the paperwork starts.
8:12What do we put up as collateral?
8:14Everything.
8:16The whole Malaysian business?
8:18The whole business, every last desk.
8:21And the lender is?
8:22Owned by Alibaba.
8:24And the buying began.
8:25A Singapore company wants servers!
8:27How many?
8:28Yes.
8:28Shipment one hundred.
8:29Shipment one hundred and fifty.
8:31Shipment two hundred.
8:32What's in them?
8:33Nvidia's best.
8:35Nearly two billion dollars' worth.
8:37At thirty thousand dollars a chip?
8:39That's about sixty thousand chips.
8:41A parking lot of sixty thousand new cars.
8:44In one year.
8:45End of twenty twenty-three, we had thirty-three million dollars.
8:49Yes.
8:49End of twenty twenty-four, we have three billion.
8:53Yes.
8:53Two point nine billion of it is deposits.
8:56From who?
8:57Refundable.
8:58From...
8:59Refundable.
8:59About ninety times bigger in one year.
9:02If a lemonade stand went from thirty-three dollars to three thousand in a year,
9:07its parents would have questions.
9:09Then, late in twenty twenty-four,
9:11an official from America's Commerce Department
9:14walks into one of the Malaysian data
9:15centers.
9:16It's supposed to be full of humming AI servers.
9:19Where's the data center?
9:21You're standing in it.
9:23These are boxes.
9:24Very advanced boxes.
9:26I'm opening an investigation.
9:28The inspector wrote it all down.
9:30And nothing happened.
9:32Because on paper, nothing looked wrong.
9:34Every sale went to Singapore or Malaysia, not China.
9:38When Nvidia sent people to check her sites,
9:40every chip was exactly where it should be.
9:43Jensen later said they had "counted every one." That was the whole trick: the chips
9:47stayed put, and China rented them over the internet.
9:50What almost nobody knew was that American spies were already listening to her.
9:55When American spy agencies listen to a foreign target,
9:59and that target talks to an American, the reports hide the American's name.
10:03They just say "an American citizen."
10:05She's talking to an American citizen.
10:07Then request the name.
10:09It's Jensen Huang.
10:11Does he know who she is?
10:12Our read?
10:13No.
10:13How far back does it go?
10:15June, twenty twenty-four.
10:17A whiskey bar in Taipei.
10:19Then we watch.
10:22So where did all those servers come from?
10:25Mostly from Aivres, the American arm of Inspur,
10:28a Chinese server giant partly owned by the Chinese state,
10:32and on America's blacklist.
10:33Inspur?
10:34You're on the list.
10:35I'm Aivres.
10:36The American son.
10:37Aivres...
10:39Not on here.
10:40Thanks.
10:40December twenty twenty-four to January twenty twenty-six: four point six billion
10:45dollars of equipment in.
10:47And from Aivres?
10:49Four billion.
10:50Malaysia was the older cousin who buys beer for kids who are too young.
10:54Except this cousin never hands the beer over.
10:57He lets you drink it at his place.
10:59Trade records later counted at least four point eight billion dollars of AI gear
11:04with Nvidia inside, all going to her company's Malaysian sister firm.
11:08Nearly five billion dollars, to one company most people had never heard of.
11:13Real smugglers hid Nvidia chips next to live lobsters.
11:17America's big smuggling bust in December twenty twenty-five was worth a hundred and
11:22sixty million dollars, about three percent of Megaspeed's haul.
11:26Megaspeed didn't need lobsters.
11:28It had invoices.
11:29Cost?
11:30Some dinners.
11:31Some whiskey.
11:32Return?
11:33Four point eight billion dollars of AI gear our companies can use.
11:37And a seat next to the man who argues with Washington.
11:40Did he ever slip you anything under the table?
11:43Not once.
11:44Why pass chips under the table when you can rent the whole warehouse?
11:48We make friends.
11:51So what was all of this really for?
11:54The seat mattered more than the chips.
11:56Not for blueprints: Nvidia says customers get "zero information relevant to national
12:01security." The prize was the man,
12:04because Washington couldn't make up its mind about what China could buy.
12:07Your China chip?
12:08Blocked.
12:10So we can't sell it?
12:12You can.
12:12We take fifteen percent.
12:14So we can sell it?
12:16And the stronger one too.
12:17We take twenty-five percent.
12:20I'm going to need a bigger whiteboard.
12:22Blocked.
12:23Then fifteen percent.
12:24Then twenty-five.
12:26Washington changes its mind every few months.
12:29And who does Washington keep hearing from?
12:31Him.
12:32That first call alone cost Nvidia four and a half billion dollars,
12:36in chips it suddenly couldn't sell.
12:38That's about thirteen dollars from every person in America, gone in one phone call.
12:43And through every one of those calls,
12:45Jensen made the same argument he'd been making for years, out loud,
12:49on every stage he could find: let American chips compete, everywhere.
12:54So you want to sell to China?
12:56I want the whole world building on American chips.
12:59Hold that thought.
13:00In Taipei, in May twenty twenty-five, he put it bluntly.
13:04All in all, the export control was a failure.
13:06A week later, to his investors:
13:08The fifty billion dollar China market is effectively closed to U.S.
13:12industry.
13:13Fifty billion dollars.
13:15That's about a hundred and fifty dollars for every American, left on the table.
13:19That autumn in London, he warned that China was going to win the AI race,
13:23with cheaper power and fewer rules.
13:26That same night, he made sure nobody missed whose side he was on.
13:29It's vital that America wins by racing ahead and winning developers worldwide.
13:34That's Jensen in one line.
13:36He wants America to win,
13:37and he wants to sell the whole world the tools to build on it.
13:41Now look at it from Beijing.
13:43One chip is worth about thirty thousand dollars.
13:46One conversation between this man and the White House can open a
13:49fifty-billion-dollar market, or close it.
13:52Which one would you rather have a seat next to?
13:55What is he telling Washington?
13:56Let American chips compete.
13:58Everywhere.
13:59He says that on every stage in the world.
14:02Why do we need you?
14:03Because I hear it first.
14:06And I see who he says it to.
14:07That's the job the memo would later describe: learn what he knows,
14:11and sit beside the man Washington listens to.
14:14And Washington kept moving.
14:15In December twenty twenty-five,
14:17Washington let approved Chinese buyers have the stronger chip.
14:21That same week, prosecutors announced that big smuggling bust,
14:24the one Megaspeed made look small.
14:26You're under arrest for sending these to China.
14:29Approved.
14:30What did you just approve?
14:32Sending these to China.
14:33Even the approved buyers weren't always what they seemed.
14:36New Matrix, Beijing.
14:38Approved.
14:38Hello?
14:39Anyone?
14:40The New York Times found that New Matrix,
14:42a seventeen-month-old firm Washington had cleared to handle those chips,
14:46had an office that was "a hollow gray shell
14:49with wires dangling from the ceiling."
14:51On paper, it was approved.
14:53On paper, Megaspeed looked fine too.
14:55Back in the middle of twenty twenty-five, Megaspeed had gone quiet.
14:59It stopped buying and walked away from an order worth three point two billion
15:04dollars.
15:05In October twenty twenty-five,
15:07Senator Tom Cotton asked Commerce to investigate Megaspeed.
15:11He called the company it came from
15:13A Chinese government-owned cloud company.
15:15The New York Times found the two billion dollars of chips.
15:19Nvidia said Megaspeed had "no China shareholders."
15:23In February twenty twenty-six, her data-center
15:25landlord, a business of Bain Capital,
15:28gave all the power it had set aside for Megaspeed to someone else.
15:32And the Commerce case moved to the Justice Department.
15:34By then, the people listening to her phone had a lot more than boxes.
15:41They had watched her for about a year.
15:43They photographed the dinners in Singapore.
15:45In May twenty twenty-five,
15:47there's even video of the two of them leaving
15:49a dinner with AI suppliers in Taipei,
15:52Alice a few feet behind him.
15:54In the spring of twenty twenty-six, America wrote it down,
15:57in a memo overseen by Secretary of State Marco Rubio.
16:01Recruited by China's Ministry of State Security.
16:04To gather information on Jensen Huang.
16:06And to shape his lobbying for chip sales to China.
16:09Who else sees this?
16:10Just this table.
16:11The memo went round that small group before
16:14President Trump's trip to Beijing in
16:16May.
16:16According to The New York Times, the
16:18President had been briefed, and didn't act.
16:21Jensen had been left off the list for that plane.
16:23Then Trump called him,
16:25and Jensen flew to Alaska to climb aboard Air Force One on the way.
16:31On the twenty-ninth of October, twenty twenty-six,
16:34The New York Times broke the story: Alice Huang had been passing information to
16:38Beijing, and American intelligence knew it.
16:41Nvidia's stock fell about three percent.
16:43Jensen told Bloomberg her contacts were about Megaspeed.
16:47It was all completely normal and not unusual.
16:49He said she no longer worked there.
16:51Beijing answered too.
16:53Nothing more than an attempt to smear China.
16:56Three congressmen asked Jensen in for a closed-door briefing on the eighteenth of
17:00November.
17:01Their letter warned of
17:02Significant national security concerns.
17:05On the sixth of November, the memo itself leaked.
17:08The spy memo's out!
17:09I know.
17:10How bad is it?
17:12We're up two point seven eight percent.
17:14Up?
17:15Today's news will not slow NVIDIA.
17:17But here's the part that still has no answer.
17:20Why did nobody tell Jensen?
17:22When the government finds a spy close to an American, there's a way to tell them.
17:26It's called a defensive briefing.
17:28In twenty fifteen, the FBI gave one to a congressman in California.
17:33Your fundraiser works for Chinese intelligence.
17:36Then she's gone.
17:37He cut her off.
17:38Jensen Huang never got that visit.
17:40The people who knew unmasked his name, photographed his dinners,
17:44wrote the memo and briefed the President.
17:46Nobody told the man at the table.
17:48He had no idea.
17:50And the memo says the friendship became more than a friendship.
17:53He was the target, and she got closer than anyone was ever meant to.
17:57On the eighth of November, Jensen wrote to his staff.
18:00I owe my family and all of you an apology.
18:03I was unfaithful to my wife.
18:05My actions hurt her and our children.
18:07There is no excuse for what I did.
18:09I am deeply sorry.
18:10Nvidia's board set up a committee of
18:12independent directors with outside lawyers.
18:15So far, it sees
18:17No reason to believe that either national security or NVIDIA secrets were
18:21compromised.
18:21Jensen is still CEO.
18:23And here's where his story reaches your wallet.
18:26Nvidia is now about eight dollars of every hundred in an S&P five hundred index
18:31fund.
18:32If you have a retirement account, there's a good chance you own a slice of him.
18:35Wait.
18:36I own Nvidia?
18:37Everybody owns Nvidia.
18:39And one scary headline from China can move it hard.
18:42In January twenty twenty-five, a Chinese AI
18:45lab called DeepSeek shocked Wall Street.
18:48A Chinese lab built a cheap AI!
18:50We just lost five hundred and eighty-nine billion dollars.
18:54How much is that?
18:55About seventeen hundred dollars for every person in America.
18:59It was the biggest one-day loss in market history.
19:03Nvidia reports its earnings on the seventeenth of November.
19:06The congressmen get their briefing the next day.
19:08And two weeks later, Jensen walks onto a stage in Washington,
19:12the same city as the people who never told him.
19:15And Alice Huang?
19:16She's gone from Megaspeed.
19:17Her name has been taken off its company papers.
19:20Nobody has said where she is.
19:22Go back to that dinner in Singapore.
19:24The candles, the toast to friends.
19:26The chair next to Jensen is empty now.
19:29We make friends.
19:30America watched her at his table for almost two years, and never told him.
19:35So who's pulling up a chair next to the people who build America's AI tonight?
19:39Jensen ended his letter like this.
19:42I love our country and our company.
19:44I am proud and grateful to be an American.

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