Nvidia shares fell sharply on Tuesday, extending losses for a second consecutive session, as fresh allegations surrounding CEO Jensen Huang's relationship with a Chinese businesswoman accused of spying for Beijing added to concerns over the chipmaker's China business and its exposure to US export controls.
At 12:14 pm GMT-5, Nvidia shares were trading at $167.50, down $11.17, or 6.25% for the day. The decline came as investors weighed the potential fallout from the allegations, which have raised questions about the movement of restricted Nvidia chips into China and Huang's influence over US technology policy.
According to The Information, Huang's alleged relationship with Alice Huang, who has been accused of being a Chinese spy, facilitated the shipment of at least $7.5 billion worth of Nvidia chips through Chinese firms.
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The New York Times had earlier reported that the Chinese businesswoman was identified as an alleged spy for China's Ministry of State Security in an intelligence memo circulated within the Trump administration. Beijing has rejected the allegations, calling them a smear.
The controversy has brought renewed attention to Nvidia's dealings with China, a market that once accounted for nearly a quarter of the company's revenue before Washington introduced sweeping restrictions on advanced chip exports in October 2022.
Three House committees have reportedly requested closed-door briefings with Huang over his relationship with Singapore-based Megaspeed, an Nvidia customer accused of diverting restricted AI chips to Chinese companies. Megaspeed has denied wrongdoing, saying inspections found no evidence of export-control violations.
The political implications could be significant. Huang has been among the most influential technology executives advising US President Donald Trump on artificial intelligence policy and has repeatedly argued for allowing Nvidia to sell advanced chips to China.
Trump had cleared the way for Nvidia to ship its H200 chips to China in December, subject to the US government receiving a 25% share of sales. However, Beijing has yet to approve large-scale imports, according to Moor Insights & Strategy CEO Patrick Moorhead.
Speaking to CNBC, Moorhead said the latest developments could encourage Congress to push for tighter oversight of chip export licences and mechanisms to track the location of advanced processors.
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Meanwhile, the broader market remained under pressure after hotter-than-expected October inflation data revived concerns that the Federal Reserve could keep interest rates higher for longer. At 9:47 am ET, the Dow Jones Industrial Average was down 0.49%, the S&P 500 had declined 0.61%, while the Nasdaq Composite was trading 0.74% lower.
Nvidia's latest slide also weighed on the semiconductor sector, with the Philadelphia Semiconductor Index falling 0.9%, after two consecutive sessions of gains.
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