E-Paper
Terms of Trade | Between the frivolous and the promiscuous
Huang is not just guilty of being promiscuous in his personal life by having extra-marital affairs. He is also seen as the epitome of strategic promiscuity
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Never in the history of capitalism has an extra-marital affair (there is more than one of them now, btw) generated so much anxiety in markets. But Jensen Huang -- he resigned as the chief executive officer of Nvidia on Thursday -- and his company also represent an unprecedented phenomenon in the history of capitalism. Huang’s company makes (okay, designs) the most cutting-edge graphics processing units (GPUs) in the world. It has a near monopoly on them. Estimates put Nvidia's share of the advanced GPU market at as high as 90%. These GPUs are the building blocks of data centres, the proverbial factories churning out artificial intelligence today.
Why does Nvidia matter to the US? It is the only part of the elite AI hardware triumvirate owned by an American company. The other two are Taiwanese (TSMC) and Dutch (ASML). The former makes the chips, and the latter makes the cutting-edge lithography machines used to produce them. Take out Nvidia, and the US would have very little control over the GPU supply chain and the great power competition in AI. American control over this supply chain is supposed to ensure two things: American AI companies have an assured supply of GPUs and China does not have access to them.
This is where the American deep state is at odds with its capitalist state.
The former has a consensus of sorts to deny or derail cutting-edge tech transfers to China. Disallowing sales of Nvidia’s advanced chips is at the top of this deny list. In an ideal world, this would be a perfect strategy. But in the real world, this strategy has two critical flaws.
One, it assumes that China has no leverage vis-à-vis the US. Its near-monopoly in rare-earth supply chains is the opposite of that. It can cripple anything electronic, from washing machines to missiles. Any US government must be mindful of this fact.
Two, companies in the business of making and selling technology are private entities. They are wedded to profits rather than safeguarding strategic national interest. Huang has been a strong advocate of diluting restrictions on chip sales to China, which is now being argued as evidence of him being compromised because of his affair with an alleged spy. There is another, more benign, explanation. Nvidia’s shareholders, who now seem to be jumping up and down, draw their bread and butter (and caviar) from the company’s profits and revenue rather than from some national security and resilience document released by the Pentagon. That might sound awful but it is capitalism. The argument – as Chris Miller has argued in his excellent book Chip Wars—is particularly germane to the chip industry -- it became so capital-intensive that it was too big to compete even for the American state.
In this case, Huang is not just guilty of being promiscuous in his personal life by having extra-marital affairs. He is also seen as the epitome of strategic promiscuity – transferring technology to China – by China hawks in the American deep state.
In Nvidia’s case, Singapore, the allegation goes, has been acting as the perfect conduit for its chips potentially breaching US export sanctions. “Singapore represented 18% of fiscal year 2025 total revenue based upon customer billing location. Customers use Singapore to centralise invoicing while our products are almost always shipped elsewhere. Shipments to Singapore were less than 2% of fiscal year 2025 total revenue”, an FT Alphaville piece from November 2025 quoted from Nvidia’s results.
Another FT piece this week talks in detail about how the “(Megaspeed) case has exposed the network of intermediaries that operate through Singapore, helping Chinese tech companies gain access to advanced US chips while raising questions about the city-state’s role in Washington’s efforts to restrict China’s access to AI technology.”
Megaspeed is the company of Alice Huang, the woman and an alleged Chinese spy with whom Huang had an affair. “Singapore has a unique position because it has very strong economic ties to both the US and China, which means it is often the conduit between the two when more direct access is not possible,” said Matthias Hendrichs, a Singapore-based adviser to AI companies. “Its role in grey markets is a consequence of Singapore’s close ties to both superpowers and is something it has to manage."", the FT piece added.
While Singapore is central to the latest precipitation between the US and China, it is definitely not the only country experiencing this. More and more countries, especially on critical military and economic frontiers, are now experiencing the squeeze on their ability to balance the great power competition between the US and China. The tension is most acute in the Asia-Pacific. China is increasingly making it clear to countries that it will make demands that will test the limits of a policy seeking simultaneous congruence with both Washington and Beijing.
In an ideal Pax Americana world, the US would not have allowed this to happen. Its strategic alliances and pull have a longer history and deeper influence than what China is beginning to flex now. But the US under Trump has been doing the exact opposite. Trump has alienated some of the US’s most critical allies across the globe by making demands which are as outlandish as annexing Canada. Beyond the crude rhetoric, Trump’s America has also been forcing countries to invest more capital in the US and make their exports to the US more difficult and expensive via tariffs. Offering its capital and domestic markets to allies was the bedrock of US influence in the post-Second World War world, where the US has had clear hegemony since the end of the Cold War. In his zeal to unleash the MAGA and America First agenda, Trump has been extremely frivolous regarding these larger concerns. His only deviation from the MAGA agenda, the war in Iran, has inflicted irreparable and irreversible damage to the US's strategic heft in West Asia.
Between capital which is promiscuous and a political leadership which is frivolous, l’affaire Nvidia is as much a crisis for US hegemony as it is for the company and its former CEO.
(Roshan Kishore, HT’s Data and Political Economy Editor, writes a weekly column on the state of the country’s economy and its political fall out, and vice-versa)
