The NVIDIA Spy Scandal and What Needs to Happen Next
There are copious news stories with the details, and more will be revealed as investigations dive into the incident, but in brief, Jensen leads one of the most powerful American technology companies and was spotted several times in public with a woman who is suspected of being a spy for China.
The United States counterintelligence agencies are investigating the woman, Alice Huang, who they suspect is a Chinese intelligence asset that is using her access to Jensen for the benefit of China.
Alice Huang is the managing director of Megaspeed. NVIDIA has been doing business, selling advanced chips, to this woman’s company, which is suspected of transferring sensitive technology to China.
Influence on Government Policies
During this time, Jensen advocated loosening restrictions on highly sensitive technology to China.
After the connection to China came to light, Jensen responded by sending a message to all NVIDIA employees admitting to an affair with the woman, but denied any other wrongdoing. The NVIDIA Board has initiated an independent investigation, and the FBI is now involved as well.
This is quickly shaping up to be a classic economic espionage influence operation that successfully targeted Jensen.
Here are the deeper insights and why it is important.
Influence Operations
Deep influence operatives act in subtle ways to influence their targets. It may also lead to hard manipulation for the benefit of the orchestrating government. Jensen, going public with this affair, although damaging to his personal life, career, and NVIDIA’s reputation, is better in the long run. At this point, Jensen probably has good advisors, whom he is listening to, that likely encouraged him to admit the relationship.
Here is how China operates its economic espionage influence operations:
An agent, either formal or recruited due to their access, fosters a relationship with the target. This may be personal and even sexual. By simply being around the target, the agent can potentially gather sensitive information, provide timely opinions, and convey influential nonverbal cues to the target. It is basic human nature to incorporate the feedback from those you trust in your decisions and foreign influence operations take advantage of this fact.
If someone you cared about, respected, or had a close connection with smirked or expressed disdain for a policy you were considering, it would be normal to subconsciously want to adapt and more likely be willing to soften your position.
Targeting Powerful People
On the right person, this can have major effects at the national level.
We can only ponder, when the US government wanted to block the transfer of AI chips to China, how the relationship with this woman influenced Jensen’s decision to make statements like “China is not our enemy” and lobby the White House to allow NVIDIA to ship over 600,000 advanced H200 chips to China.
Influence-based espionage activities can eventually turn harsher and more direct.
If the circumstances require more actions of the target that influence alone cannot achieve, or if the victim attempts to sever the relationship, then direct extortion becomes a viable option. The agent or a handler can threaten full exposure of the relationship, which could end a career, devastate the company, and may destroy a marriage. This is personal leverage intended to retain and strengthen control over the target.
Breaking the Shackles
This is why what Jensen did is so telling.
Admitting the relationship takes the power away from potential extortionists. It is embarrassing and can end a career, but it is the right thing to do in order to stop the extortion and break the control. It also reveals intent and an openness to fight against the outcomes of the manipulation.
Truth is powerful, and whatever consequences result are likely deserved.
If these allegations are true, that a Chinese agent was influencing Jensen, the attacker’s objectives were likely to soften restrictions on technology to China, gain early insights into emerging industry decisions, establish supply chains that avoid sanctions, or create situations where intellectual property could be harvested for the benefit of Chinese companies and their economy. This has been a common theme in previous economic-espionage activities by China in the past.
NVIDIA Must Act
NVIDIA must take clear and dramatic actions to reverse policies and views, to overcorrect potentially manipulated decisions in the past.
Here is, in my opinion, what needs to happen next:
The board and CEO of NVIDIA should do 3 things:
1. Block NVIDIA Tech and Products to China: Immediately restrict all NVIDIA technology sharing with China and Chinese companies, to protect America’s high-tech innovation, industry plans, and to help sever China’s influence in the US supply chain. This must include the tech they previously advocated sharing and even more to show how seriously they take this situation, to send a message to China, Russia, Iran, North Korea, and other nations who are pursuing such tactics against leaders of Western companies and politicians.
2. Advocate for Regulations: After such a compromise, NVIDIA must become a staunch political advocate to protect not only chip technology, but all other related tech that China is seeking to obtain. It is imperative they use their copious resources to show they will be a staunch advocate of protecting against such economic espionage. They must support industry groups and lobbyists who are working across industries to protect Western intellectual property, sovereignty, and independence.
3. Establish a Board-Level Action Group: The board must create a dedicated, permanent, independent action team to maintain vigilance and protect its technology, people, customers, and reinforce shareholder trust. This oversight body must report directly to the board and act immediately in 3 ways:
- First, look for other NVIDIA executives, engineers, and other influential persons in the company who are also being targeted or exploited. If China targeted Jensen, they are also targeting others in the company. That is standard practice, and they must be weeded out.
- Second, initiate an investigation of all their suppliers and partners to restrict access, data sharing, and collaborations that benefit China. They should work with the FBI and international counterintelligence agencies to identify potential third-party adversaries.
- Third, they establish permanent working relationships with international counter-economic-espionage agencies and share best practices with other technology companies that are likely being targeted. Teamwork and information sharing are incredibly valuable to counter such threats.
Rebuilding Trust
Lastly, seeing how trust is broken and the risks of manipulation at NVIDIA have reached the highest level, I recommend the board consider instituting a 20-year moratorium on technology sharing with China. Formalize this position by implementing it into their charter to force a corporate culture change, send a powerful message to its attackers, and show Western governments that other aspects of their products are not affected, tampered with, or compromised.
Red Sparrow Flies
I expect the woman involved with Jensen, Alice Huang, to slip away and return to China, where she will quietly be recognized as a patriot and used to recruit more people to act in similar ways. I doubt it will be as public as the Russian spy Anna Chapman, who found fame after being convicted of spying and returned to her homeland as a celebrity. China is much more discreet and persistently maintains denials regarding its espionage activities.
We all must understand that this type of economic espionage has been ongoing for more than 40 years against the US. China and Russia are leading experts in these tactics. If it is happening at NVIDIA, it is happening elsewhere. China has the resources.
Jensen’s Path
Where Jensen is different is that he quickly admitted the affair. Many would or have not made the admission, and remained in the clutches of their handlers. Such extortion, threatening to expose infidelity and improper ties to a foreign intelligence operation, can destroy a career, family, and permanently scar a reputation! It is a powerful tool to maintain control of the target.
By proactively admitting it himself, Jensen denies his enemies this power over him. It is a bold decision. Many are not that strong or willing to do the right thing and accept the consequences. They would rather continue being a puppet and often either justify their actions or deny the facts to themselves and others.
The Hidden Victims
That means there are untold numbers of people in powerful positions who are currently being passively influenced or outright threatened to work in the interest of China and other nations seeking to manipulate and steal from the United States and its allies.
This is just the beginning of the NVIDIA story, but it is a reflection of what is going on with other companies, politicians, technologists, and influencers.
Hacking is not exclusive to software and hardware. This incident is showing how people can be hacked, manipulated, and compromised as well, for great benefit to the attackers.
Executives, policymakers, and security must take the time to understand the bigger risks, and this incident may open the eyes of consumers, investors, regulators, boards, and those being manipulated.
Let’s take action that punishes our adversaries to dissuade them from espionage and counter their objectives by making an example of how technology restrictions and penalties must be even stronger.
The NVIDIA board has an opportunity to send a message to its shareholders, China, Russia, and others that they will not be victimized and there will be adverse economic consequences for such attacks.
The threat of foreign influence operations will persist. How we choose to address the risks will determine how successful our adversaries will be at manipulation and the persistence they will maintain to our detriment. It is now our move.
