Trump's China Trip: Nvidia Scandal and AI Chip Tensions Loom Large

United States President Donald Trump is set to visit Shenzhen, China, next week for the Asia-Pacific Economic Cooperation (APEC) summit, where a meeting with Chinese President Xi Jinping is scheduled. This visit occurs amidst growing scrutiny of Jensen Huang, Nvidia’s outgoing chief executive and a known ally of Trump in Silicon Valley. Huang is facing questions regarding his association with Alice Huang, a former Megaspeed executive suspected by US officials of ties to Chinese intelligence. China has refuted these allegations.

Nvidia announced on Thursday that Jensen Huang would be stepping down as chief executive. Huang had previously accompanied Trump on his May visit to Beijing, a presence that was significant for Nvidia as it sought approval to sell its H200 AI chips in China. His participation in the upcoming delegation is now uncertain. This situation raises the question: could Trump's close relationship with Huang influence his administration to adopt a more stringent policy towards China?

How Huang Influenced US-China Chip Relations: As the founder and CEO of Nvidia, Huang advocated for the relaxation of restrictions on selling advanced chips to China, asserting that broader access to US technology would help maintain American leadership in AI development. In December 2025, Trump authorized the sale of the H200, Nvidia’s second-most powerful chip, to China, with 25 percent of the revenue designated for the US government. This decision was made despite opposition from China hawks in both political parties. Huang’s unexpected inclusion in Trump’s May delegation to Beijing was intended to facilitate stalled H200 sales. However, despite Trump's approval, actual shipments were limited due to delays in import approvals from the Chinese government, which appeared to be favoring domestic chipmakers.

Trump has publicly supported Huang during his recent personal scandal, describing him as an “honourable guy”.

Will the Nvidia Scandal Lead to a Tougher US Stance on China? An immediate shift towards a tougher stance is unlikely. According to Steve Okun, a geopolitical analyst based in Singapore, Huang’s departure from Nvidia’s board and the surrounding scandal are not expected to substantially alter US-China relations, which he characterizes as “a stalemate at best”. Instead, ongoing US restrictions on AI product sales to China could lead to increased tensions through the diversion and diffusion of AI products globally, both formally and informally. Gabriel Wildau, managing director at Teneo, noted that Trump has shown no inclination to alter the current US-China rapprochement but cautioned that the president might face increased pressure from Congress and internal administration hardliners. Carsten Holz, an expert on the Chinese economy at the Hong Kong University of Science and Technology, suggested that Trump’s lack of a clear China policy makes his position in the upcoming Shenzhen talks unpredictable, and that Huang’s personal matters are unlikely to be a significant factor in China-US relations.

Sources of Pressure for a Harder Line on China: The primary pressure is emanating from Congress, which will be controlled by Democrats in January. Lian Jye Su, chief analyst at Omdia, stated that a firm US approach to AI and China is a bipartisan consensus, and Trump would likely act to protect his legacy on this issue. On Wednesday, Senators Elizabeth Warren and Chris Coons urged Commerce Secretary Howard Lutnick, Secretary of State Marco Rubio, and White House chief of staff Stephen Miller to preserve all records related to Nvidia’s chip exports to China, citing concerns about the government's ability to enforce export controls and safeguard national security. Axios reported that Lutnick had previously delayed a planned crackdown on firms suspected of supplying Nvidia chips to China. Additionally, procurement documents obtained by AFP revealed that a Chinese university with ties to the country’s defense sector purchased Nvidia H200 chips via a third party in September and October.

China's Response: Beijing has denied the espionage allegations, accusing Washington of using them as a pretext to implement stricter controls and semiconductor export restrictions. Ministry of Foreign Affairs spokesperson Mao Ning stated on Thursday that the US should cease fabricating “spy” narratives as a justification for a technological blockade. However, Mao also expressed China's willingness to collaborate with the US to implement the consensus reached by the leaders. Su of Omdia believes China is keen to engage with Trump due to significant interest in Nvidia graphics processing units, and Chinese chipmakers could benefit from improved access to US technology. Shares of Moore Threads, MetaX, and Cambricon, prominent Chinese graphics processor manufacturers, saw a nearly 10 percent increase on Thursday.

Outlook Post-Shenzhen: Holz pointed out that the use of advanced Nvidia chips in Singapore data centers serving mainland China is not new. Okun anticipates mounting pressure next year, with potential congressional action such as the Remote Access Security Act to prevent Chinese firms from accessing advanced chips via the cloud. The Department of Commerce might also impose export controls on Megaspeed or require licenses for advanced chips sent to countries like Singapore and Malaysia. Okun predicts these measures could strain US-China relations in 2027, but not in the immediate future.