What Does Beijing Know About Nvidia’s Jensen Huang?

In video investigates whether a woman having an affair with Jensen Huang was passing secrets to China, plus Pete Hegseth digs in as lawmakers wait whether to impeach the defense secretary. And surging producer inflation is yet another sign of China's sluggish economy. People outside of China are buying made in China things, but people within China are not spending money to purchase these very same goods. And that's a problem for the communist leaders in China. It's Monday, November 9th. I'm Daniel Bach for the Wall Street Journal, filling in for Luke Vargas. And here is the AM edition of What's News, The Top Headlines, and Business Stories moving your world today. In video sport is launching an investigation into reports that Jensen Huang may have been the target of a foreign SVNage campaign linked to a romantic relationship the CEO had with a woman suspected of working with Chinese intelligence. Last year US officials concluded that a top executive at Megaspeed International Alice Huang was sharing information with the Chinese government. The Singapore based firm was spun out of a Chinese company in 2023 and has been building data centers across Asia with Nvidia chips. Journal tech reporter Robbie Wieland says it's among the businesses that have come under scrutiny for potentially helping China gain access to the most powerful AI chips. For a couple of years now, Nvidia has been locked out of the Chinese market. And that is a decision that was made by the US government over national security concerns. There's a sense that if Nvidia's most powerful chips are being sold in China, then Chinese AI companies will develop products that are competitive to America. And America will, in some sense, lose the AI race. The Commerce Department, Justice Department, and a few others have been investigating Megaspeed for over a year now. What they want to find out and what they are worried about is that Megaspeed might be responsible for some smuggling of Nvidia chips into China. And they're also concerned that Megaspeed provides what's called remote access to these chips, which is essentially keeping data centers offshore near China. And providing access to Nvidia's hardware and the computing power that it provides remotely. So rather than smuggling servers and chips into the mainland of China directly, you're giving Chinese AI companies access to those chips in other countries nearby. Nvidia's investigation comes as Jensen Huang lobbies the US government and leaders around the world to allow the free flow of chips, powering the latest AI models. While pushing back against concerns the approach could compromise national security, Robbie says beyond getting access to Nvidia's top chips, it's unclear what Beijing has learned about the company's technology. These latest developments involving what essentially is being described as a honey trap situation where the Chinese government seems to have placed somebody who works for the state intelligence services in the orbit of this very powerful CEO and shared information about Nvidia with the Chinese government as well. Is yet another way in which Nvidia's chips are being used and Nvidia the company itself is being used in fact to compromise national security. That's the worry that we're hearing about from American intelligence agencies from authorities and other countries as well. What we don't know is what if any information has already been shared about Nvidia with the Chinese government. The Nvidia CEO is among the tech executives who is closest to President Trump, frequently calling him to consult on AI and China policies while praising the White House's economic strategy. Last night Trump told reporters Huang should stay on as CEO. I have not spoken to him about it. I just know he's a fine person but you never know what he's going on. I'm sure I hope everything's fine. He's done such an incredible job and so I would certainly hope that he's a fine person in my opinion. In a statement to Nvidia staff, which includes both his adult children, Huang apologized for being unfaithful to his wife. It couldn't be determined where Alice Wong is or whether she still holds a top role at Megaspeed, which couldn't immediately be reached for comment. Earlier attempts to reach Alice Wong for comment were unsuccessful. She is not related to the Nvidia CEO. China's embassy in Washington has rejected the allegations of spying. Lawmakers are returning to Capitol Hill today with some big question marks hanging over the final 55 days of Republicans' House and Senate majorities. Foremost among them, whether to impeach Defense Secretary Pete Hague Seth, outgoing Republican representative Thomas Massey of Kentucky is considering leading that effort on charges that include waging war on Iran without congressional authorization and ignoring laws intended to minimize civilian deaths. Speaking on ABC News this week, yesterday, Democratic House Minority Leader Hakeem Jeffries said he'd be a hard yes on an impeachment push and predicted others would join him. I believe there will be incredibly strong support for that resolution. While senior White House officials have blamed Hague Seth for the unpopular war and are pushing the president to oust him, Trump has said he still likes Hague Seth and has made it clear he wants him to stay in fight should his congressional opponents pursue impeachment. Didn't work against President Trump and it won't work with me. You can rest assured of that. Should Hague Seth step aside or be fired, we report that Republicans want to move quickly to confirm his replacement before the end of the year. Meanwhile, in an interview with 60 minutes, President Trump has acknowledged his immigration policies may have hurt Republicans in the midterm elections, saying his administration's pursuit of mass deportations may have been too tough. He also agreed with the notion the war had hurt Republicans, but said he wished Vice President JD Vance had addressed whether it was necessary. Vance has released a public statement blaming the war for Republican losses. Asked who he might endorse as a successor, but science Vance, Trump mentioned Secretary of State, Marco Rubio. Well, I think Marco's great. I think he's staying, by the way, as Secretary of State. I think so. I mean, he certainly loves it and he's doing great. He's doing a fantastic job. And Trump said yesterday he was joking about wanting to make the UFC's Dana White, his new White House press secretary, though he added it was a pretty good idea. White is scheduled to meet with the president today. However, Trump confirmed it was for other reasons. Coming up in a blow to Prime Minister Benjamin Netanyahu, Israel's opposition leader is handed his first shot at power. That story and more after the break. Israeli President Isaac Herzog has given opposition leader Gotti Eisenkott the first chance to form a government, side-stepping Prime Minister Benjamin Netanyahu. Speaking almost two weeks after an inconclusive election, the president said that progress should be made with the Gaza Peace Plan and negotiations with Lebanon, while the country deals with the new political situation in the US. reporter Anat Pelleid says that the announcement means Eisenkott, who leads the centrist Yashar party, has up to six weeks to build a coalition. The fact that Eisenkott was picked to try to form a ruling coalition in Israel is a blow to Netanyahu because he wants to continue leading the country. So what Eisenkott has to do now is basically try to put together a coalition from Israel's very different parties who have different ideological views and disagreements between them. And then if he isn't successful, that will go to a different candidate and that could likely be Netanyahu. Anat says this attempt to cobble together a government comes under difficult circumstances after President Trump's announcement last week to stop military aid to Israel by the end of the year. The US is Israel's most important powerful ally and it has relied on it strongly. Netanyahu has strongly allied himself with President Donald Trump and the Republican Party. There is an understanding that Israel is losing support around the world. It's declining everywhere and including in the US, as we saw in the midterms and how central the war in Iran and relations with Israel have become. And so that is a major concern and many of the opposition parties are saying that they want to rebuild those relationships. They want to have a government that cracks down on settler violence in the West Bank. Eisenkot has spoken about reaching diplomatic achievements. The new Israeli parliament, or Knesset, is set to be sworn in tomorrow evening. Yemen's Houthi rebels have claimed responsibility for a drone and missile attack on Riyadh's financial district on Sunday, striking the Saudi aramco tower also known as Villas in the sky. The strike on Riyadh followed heavy Saudi air strikes targeting rebel controlled regions in Yemen. According to Yemen's Houthi-led health ministry, a Saturday strike near the capital Sana'a killed at least 33 people and wounded dozens more. Earlier this year, when a drop in Japan's currency prompted a rare joint intervention with the US. It turns out Tokyo also spent billions to prop up the end. According to Ministry of Finance data, Japan spent more than $97 billion to bolster the currency this summer. After the end slid to a four-decade low. But despite that coordinated campaign, a persistent interest rate gap between the two countries has kept the end under pressure. Fuelling expectations that the Bank of Japan will raise rates again before years end. China's factory gate prices rose at their fastest pace in more than four years in October, driven by surging energy costs. Our China bureau chief, John Chang, has more. So producer prices rose 5.7% in October. That's a pretty high number for China given that. it had been in a deflationary environment for much of the past three, four years. Consumer inflation in China by contrast was very low. It was in fact 0.0% in October from the year ago period. And that's really a reflection of a lack of demand, a lack of demand from ordinary consumers for all sorts of things, groceries, things that they need to buy for their homes as well as services and other discretionary spending. I think if you're sitting in Beijing, you're concerned about what you're seeing here because it really reflects a real loss of mojo you could say after all these decades in which China's economy both inside and outside, what it was producing for the rest of the world, but also what people inside the country were willing to spend more and more. That is no longer the case. And a string of high-level departures from blackstones real estate business is shaking up the world's biggest property investor. Nearly a third of the unit senior managing directors have left the firm over the past three years as its investment funds for the sector have slumped. And with borrowing costs high and commercial real estate struggling, industry executives don't see prospects for that changing soon. And that's it for what's news for this Monday morning. Today's show was produced by Luke Vargas and Hadi Moir, our supervising producer, is Sandra Killhoff. And I'm Daniel Bach for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.