Following Jensen Huang’s resignation from Nvidia after a stunning sex scandal, it’s reasonable to think the U.S. artificial intelligence industry is in trouble. Nvidia’s chips have been vital to A.I.’s ascendance; the company has directly invested billions in A.I. companies, bolstering their chances of success; and Mr. Huang himself was a cheerleader for the go-faster crowd.
The A.I. industry might be wiser to count this as a blessing. Nvidia will take a hit, but American A.I. is in a stronger position to thrive.
Mr. Huang made Nvidia into a bedrock for American A.I. companies, but he was also a baffling champion for their competitors. No person has fought more effectively to give Chinese A.I. companies access to high-powered chips, despite clear national-security risks in areas such as cyberwarfare. When the United States weighed and enacted export controls on this hardware, Mr. Huang repeatedly and successfully pushed back, to the delight of Chinese A.I. developers. Last year, the Trump administration blocked some Nvidia chip sales to China only to reverse course three months later. The administration also allowed Nvidia to sell its powerful H200 chips in China, with a 25 percent cut going to the U.S. government.
To get his way, Mr. Huang built a strong friendship with President Trump. He attended a $1 million-per-person dinner at Mar-a-Lago and assembled a bully of a lobbying operation in Washington. He became so close to Mr. Trump that he took a phone call from the president while onstage at a September industry summit.
Helped by the deals Mr. Huang set up to make Nvidia chips available to China, upstart Chinese A.I. companies made their American counterparts sweat. The first major shock, even before the repeal of H200 export controls, was the unveiling last year of DeepSeek-R1, a Chinese model that matched some American A.I. capabilities at what appears to have been a fraction of the cost. Another shock was Moonshot AI’s Kimi K3, a Chinese A.I. model released this summer that was found to have bested top American A.I. models in certain coding tasks.
Many experts say Chinese A.I. model capabilities lag behind those of American models by just a handful of months. Chinese models tend to be much less expensive to use and more flexible to customize, making them a major nuisance to Anthropic and OpenAI. In one week in September, companies on OpenRouter (a kind of marketplace for choosing different A.I. models to use) had used Chinese A.I. models for more than 50 percent of their activity.
Mr. Huang’s advocacy for delivering chips to China has led to some tense relationships with other American A.I. leaders, including Anthropic’s chief executive, Dario Amodei. But with Mr. Huang out at Nvidia, his influence in opening chip exports to China may go with him. That means Mr. Amodei and his counterparts could have a solid chance to broaden the gap between their technology and the Chinese competition.
China hawks are especially salivating at the possibility of preventing more cutting-edge technology from leaving the United States without Mr. Huang atop Nvidia. Chinese A.I. companies are already scrambling to rent computing capacity outside China in anticipation of more restrictive American policies. If new export controls further limit the computing power available to Chinese A.I. companies, they would probably have to narrow or scale back their efforts — leaving OpenAI, Anthropic, Google and other American firms a bigger lane to pursue more ambitious plans.
Mr. Huang’s departure will be felt in other ways, too. He’s been a pioneering force whose almost singular vision and drive generated the computing power needed to enable the advanced calculations behind American firms’ frontier models. If Nvidia falters, its ability to improve chip technology could falter as well. Nvidia’s funding has subsidized many A.I. businesses; its equity investments totaled approximately $100 billion as of July. Even Mr. Amodei’s Anthropic is expected to take about $10 billion from Nvidia alongside Anthropic’s I.P.O. next week. And there has always been some concern that preventing China from buying some American chips would spur China to simply accelerate its own chip operation, which could rival Nvidia’s.
Still, the past weeks’ revelations have shown Mr. Huang to be far more useful to China’s A.I. industry than was previously known. His relationship with a Chinese businesswoman who goes by Alice Huang, who the U.S. government reportedly believes is a spy, may have aided the imports of $7.5 billion in Nvidia chips by China during their dalliance, including some 240,000 restricted chips. When you look back to some of China’s A.I. accomplishments over the past year, you can see some traces of cutting-edge banned Nvidia chips playing a role.
The merits of semiconductor export controls will surely be debated for years to come, but it’s hard to argue that tightening the spigot will do anything but bolster American A.I. tech, at least in the near term. Mr. Huang’s stunning last action at Nvidia — resigning — may be what puts America’s A.I. industry on its best footing.
Alex Kantrowitz is the writer of the newsletter Big Technology and host of the “Big Technology Podcast.” He is the author of “Always Day One.”
Source photographs by Saul Loeb and Patrick T. Fallon/Agence France-Presse, via Getty Images.
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