The controversy surrounding Nvidia CEO Jensen Huang has plunged the US-based chipmaking giant into crisis, with the latest news reports suggesting that the embattled chief executive’s time at the helm of the company could come to an end.Just a few days ago, Nvidia’s board of directors announced an investigation into whether Huang was the “target of a foreign intelligence effort” after he admitted to an extramarital affair with Alice Huang, the founder of Megaspeed, who is alleged to be a Chinese spy.At the time, Nvidia’s board said it had “confidence in Jensen.” However, it seems like its confidence was undermined after the New York Times reported that Jensen Huang had had a second affair with an Nvidia executive, Kimberly Powell, who reported directly to him.But beyond the allegations involving one of the most prominent figures in the AI industry, the scandal has re-focused attention on a much larger challenge facing the US government, namely the continued diversion of Nvidia’s advanced GPUs (Graphics Processing Units) to China despite export restrictions imposed by Washington.So, how have US chip export restrictions evolved under President Trump, how did Nvidia GPUs continue to make their way into China, and what methods have been used to get around the export controls? Take a look.How Trump tightened, eased chip restrictionsDriven by fears that Nvidia’s most powerful processors could be used by China to build military-focused and commercial AI models that could surpass American technology, Washington turned to chip export restrictions.During his first term, President Trump banned several Chinese companies from accessing US chips and other technologies. The succeeding Biden administration introduced broader, tiered restrictions on exporting advanced chips and chipmaking equipment to countries outside the US, including China and India.Story continues below this adAlso Read | Nvidia CEO Jensen Huang’s future in doubt as fresh allegations emerge, shares fallAfter returning to the White House for a second term, Trump rescinded the ‘AI Diffusion Rule’, which had imposed new restrictions on chip exports. However, his administration also added more than 80 companies, most of them Chinese, to the US Entity List in 2025, barring them from acquiring US technology on national security grounds.Earlier this year, the Trump administration eased controls on Nvidia’s previously banned and less powerful ‘H200’ chips on the condition that it would take a 25 per cent cut of chip sales to China. The export of Nvidia’s cutting-edge Blackwell and Rubin GPUs to China is still prohibited due to national security concerns.The many times restricted GPUs reached ChinaChina’s own chip industry has gained momentum over the years. As a result, Chinese regulators prevented the import of Nvidia H200 chips to protect its own industry, despite prior clearance from the US. They similarly blocked imports of Nvidia’s H20 chips, forcing the company to write off about $4.5 billion.Yet, behind the scenes, it appears that Nvidia’s GPUs have remained in high demand in China.Story continues below this adLast year, US authorities in Texas busted a massive, underground smuggling network of suppliers for Nvidia GPUs to China. The GPU smuggling syndicate reportedly involved operatives who had illegally entered the US, several phony front companies, and a secret warehouse shipping operation in New Jersey. They had attempted to export at least $160 million worth of Nvidia H100 and H200 GPUs to China between October 2024 and May 2025, according to a report by CNBC.Earlier this year, White House adviser Michael Kratsios alleged that Chinese AI startup Moonshot AI had accessed high-end Nvidia chips in Thailand to train its Kimi models, helping it narrow the performance gap with US rivals while keeping development costs lower.More recently, Northwestern Polytechnical University in China, with deep ties to the People’s Liberation Army (PLA), purchased at least $7.5 billion worth of H200 chips last month despite being on a US export blacklist, according to a report by Reuters.Megaspeed, the Singapore-based cloud computing firm at the centre of the Jensen Huang affair controversy, facilitated the shipment of $7.5 billion in Nvidia chips to Chinese firms, according to a report by The Information. These instances highlight the gaps in Washington’s efforts to curb China’s access to advanced chips.Story continues below this adHow Chinese companies found ways around US export controlsOver 12,500 chips could enter China every year through smuggling, according to a 2024 report by Washington-based think tank Center for a New American Security. Here are some of the interesting ways and loopholes which have allowed restricted Nvidia chips to reach Chinese buyers:-Subsidiary firms: Chinese companies on the US Entity List have been able to bypass bans by accessing Nvidia chips through newly set up subsidiaries. Server manufacturer Sugon, for instance, was blacklisted by the US government in 2019. However, Sugon’s former executives established a new company named Nettrix that sold server racks equipped with Nvidia and Intel chips.Another Chinese server maker called Inspur Group, which was blacklisted in 2023, used six of its subsidiaries to continue purchasing US-made chips, according to a report by Rest of World.-Overseas data centres and intermediaries: Suppliers have been found to smuggle restricted chips into China by routing them through a network of intermediaries in other Southeast Asian countries such as Malaysia, Japan, and Hong Kong. Since US export restrictions primarily govern where chips are shipped rather than who ultimately uses them, companies can keep GPUs in data centres in Malaysia and Singapore while allowing customers in China to access the computing power remotely.Story continues below this adSimilarly, cloud computing services by Google, Microsoft, and Amazon that are powered by advanced Nvidia chips have also reportedly been used by Chinese companies to access banned chips.Also Read | Nvidia short-seller flagged Jensen Huang’s ‘close relationship’ with Alice Huang months ago-Dismantling and rebranding chips: Another method involves dismantling GPUs and taking them into China in parts. The Information reported last year that Chinese AI giant DeepSeek had developed its AI model using thousands of Nvidia chips smuggled into the country this way.In a separate case, US authorities reportedly caught smugglers dismantling Nvidia GPUs and re-labelling them with the branding of a fictitious company. They also falsified shipping documents to describe the restricted hardware as ordinary products such as adapters and controller modules.-Human couriers: In some cases, human couriers have also been found to smuggle in chips to China. A student was paid for each of the six chips he carried from Singapore to China in his luggage, according to a 2024 Wall Street Journal report. It did not raise any suspicion by airport authorities because each chip was roughly the size of a gaming console.Story continues below this adWhile these chips are certainly not enough to build a world-class leading AI model, it points to the emergence of an underground network of buyers, sellers, and couriers aimed at bypassing US chip export restrictions. Chinese AI startups or research institutions also have more modest needs as compared to the computing demands of a tech giant.US chip restrictions have also forced many Chinese organisations to innovate with fewer resources. DeepSeek is a telling example as the Chinese startup rattled the global AI industry and triggered a sell-off of tech stocks after releasing AI models that, it said, were trained with lesser quality chips than their US counterparts. Chinese firms are also known to have stockpiled Nvidia chips before they were banned and developed software to optimise their use.