Nvidia faces China spy allegation as H200 sales stay below 1%

Marcus Bennett

The New York Times reported Thursday that U.S. intelligence believes a leader of Nvidia customer Megaspeed passed information to Beijing, while H200 sales account for less than 1% of Nvidia's $89 billion second-quarter data-center revenue.

What does the intelligence report allege?

Alice Huang, a Chinese national, has served as a leader of Megaspeed. The Singapore-based company is a Nvidia chip customer. Huang also has a well-documented relationship with Jensen Huang.

The reporting raises the prospect of information leakage involving trade secrets. It also places Huang's lobbying for easier chip exports under scrutiny, given his close ties to the White House.

At September's All-In Summit, Huang took a call from Trump on stage and put the president on speakerphone. Trump dismissed fears about AI's security implications as a scam.

Why do China sales remain small?

Nvidia's broader business is booming, but China remains difficult because Commerce regulates international chip sales. Huang has spent years urging the White House to relax the controls.

Washington says the controls protect national security and preserve the U.S. lead in AI. At its latest earnings report, Nvidia again omitted China sales projections from forward guidance.

The AI race has become a central concern in Washington and Beijing. China has matched or surpassed the United States in developing and distributing open-weight models that often cost far less than closed-weight systems, while U.S. frontier labs Anthropic and OpenAI retain the lead in advanced-model development.

Nvidia designs the chips that power those advanced systems. Its leading semiconductors are often treated as the benchmark for computing performance and remain popular in the United States and other global markets.

Since 2022, Commerce has blocked Chinese buyers from buying successive generations of Nvidia chips. In December 2025, Huang won Trump administration permission to export some H200 chips to China. Nvidia had spent $5 million on lobbying during that year.

The H200 sits several generations behind Nvidia's flagship products. It remains competitive for Chinese buyers, although companies such as Huawei offer alternatives.

Beijing recently blocked Chinese purchases of Nvidia chips to reduce dependence on U.S. technology. The policy favors domestic suppliers such as Huawei.

H200 sales accounted for less than 1% of Nvidia's $89 billion in second-quarter data-center revenue. Nvidia did not disclose how many H200 chips it sold to Chinese buyers. Those sales also fell below the U.S.-approved maximum because Chinese government blocks limited deliveries.

CFO Colette Kress told analysts: "Given the ongoing geopolitical uncertainty, there is no China data-center compute revenue in our forward outlook." Nvidia also said it was "unable to create and deliver a competitive product for wide distribution in China's data-center market." Broad distribution requires approval from both governments.

How do restricted chips reach China?

The restrictions have not stopped workarounds. Public reporting and U.S. Department of Justice investigations describe a black-market shadow trade.

Buyers and sellers across Southeast Asian countries not covered by restrictions import chips under legitimate descriptions. They then switch labels, change packaging, or use other methods to conceal the true contents before sending the chips into China, U.S. officials have alleged.

Inside China, users on Douyin, the Chinese version of TikTok, openly sell sanctioned chips such as Nvidia's Blackwell B300. Yahoo Finance reviewed videos offering the Blackwell B300 at millions of U.S. dollars per server. Such sales would likely breach Commerce Department restrictions.

U.S. authorities have investigated Singapore-based Megaspeed for more than a year. They are examining whether it sent advanced Nvidia chips to Southeast Asian data centers serving Chinese companies or routed chips into China through intermediaries.

Nvidia has repeatedly said it has no evidence that its chips are being smuggled into China. The company said it expects the U.S. government to alert it if someone close to Nvidia becomes a threat to American industry. It also said Huang's customer conversations never include information relevant to national security.

What does this change for Nvidia?

The immediate commercial effect is constrained. Nvidia already excludes China data-center compute revenue from its forward outlook, and H200 sales remain below 1% of the $89 billion reported quarterly data-center total.

Broader U.S. export permission has not overcome Beijing's purchase block or its domestic-chip strategy. Chinese buyers in the world's second-largest economy pay top prices for Nvidia chips, making access important to its goal of serving more customers. Washington's national-security concerns still interfere with that access.

The new issue is institutional risk. An alleged intelligence channel through a chip customer could increase scrutiny of Nvidia's customer relationships and Huang's access to U.S. policymakers. That risk sits beside smuggling investigations and a two-country approval process.

For investors and suppliers, China sales remain outside Nvidia's near-term forecast, and the espionage claim raises the compliance stakes around its business there. The episode reinforces the geopolitical tensions built into the AI trade.