Commerce chip probe was halted after Nvidia intervened, report says, as China rejects the spy claims and the stock falls about 6%

A Commerce Department chip inquiry into Megaspeed, the Singapore-based company tied to the Nvidia scandal, was halted after Nvidia intervened, according to a report on Monday^1,2,15.

Commerce Secretary Howard Lutnick had given Nvidia permission to reach out to the investigators, who declined to meet, and the contact alone was enough to unsettle officials³. An email from an Nvidia lawyer preceded a shift of the Megaspeed probe to the Justice Department³. Officials were reportedly unsettled by a reference to Kessler, a Commerce official who reports directly to Lutnick^1,2.

A Chinese government spokesman on Monday rejected claims that the woman romantically involved with Nvidia chief executive Jensen Huang was a spy⁵. Nvidia shares fell about 6% on Monday⁷. They were down 5.5% at 1:30 p.m. EST after falling as much as 7% before the open⁸.

The background and the political response

Huang admitted over the weekend, in a letter to employees, a romantic relationship with a suspected Chinese spy, and Nvidia’s board announced an independent investigation on Sunday^9,11. The woman, Alice Huang, is a former executive of a Singapore-based AI computing company⁹. Nvidia has acknowledged that its chief executive “has been the target of a foreign intelligence effort”¹⁵.

President Donald Trump stood by Huang on Sunday, calling him “an honorable guy”¹⁰. Trump’s close ties to Huang are now under scrutiny¹⁴.

Sen. Chris Coons, a Delaware Democrat, called on Monday for a probe of the reports⁶. House Democrats are demanding that Lutnick answer questions about the administration’s policy toward advanced AI chips⁴.

Why it matters to investors

Nvidia is a $4.5 trillion company, and Huang has led it since founding the chipmaker 33 years ago¹⁰. He co-founded it in 1993 and turned it into one of the most valuable companies¹².

The company has no clear succession plan^11,12. Corporate governance experts said the episode shows the vulnerability of a large company that depends on one executive, and the risks that poses to investors and customers¹¹. The board’s investigation threatens the future of one of Silicon Valley’s longest-serving executives¹³.

The report on the Megaspeed probe moves the scandal from the chief executive’s private life to how chip rules are enforced, as the investigation raises questions about whether Chinese intelligence sought access to Nvidia’s technology^1,9.

What to watch: the board’s findings, whether Lutnick answers the Democrats’ questions, and whether Congress opens the probe Coons has requested^4,6,11.