The key facts

  • The AI industry is discussing the scandal around Nvidia CEO Jensen Huang
  • Nate Singer of Heron Intelligence described a case where a CEO's wife caught her husband in a corporate jet with young women who, according to her, turned out to be 'state agents'
  • Singer speaks of at least three such cases and claims many industry executives 'effectively condone this'

A scandal that goes beyond one company

The artificial intelligence industry continues to discuss the 'honeypot scandal' around Nvidia CEO Jensen Huang, but some market participants see a problem far bigger than one individual. The Chinese government has been engaged in economic espionage for decades, and since semiconductors are at the center of the AI boom, the pressure to penetrate any involved company is extremely high. At the same time, many executives who have grown rich on this boom, according to industry sources, make themselves easy targets.

'This is just the tip of the iceberg'

Nate Singer, head of the investment-intelligence firm Heron Intelligence, which handles corporate vetting before major acquisitions and executive hires, considers the Nvidia case particularly serious but not unique. 'We have former employees describing behavior at the highest levels of management,' he said, adding that top executives 'are genuinely crossing lines that should not be crossed.' In a widely circulated LinkedIn post, Singer described a case where the wife of one CEO unexpectedly appeared in a boardroom, 'screaming about her husband and another top executive of the company flying on a corporate jet with a couple of young ladies (who, as it turned out, were also state agents).' According to him, he has seen at least three reports of similar cases and suspects many others went unreported: 'There are far more of these women. They are embedded in these companies.'

The industry has long been in the crosshairs

Semiconductor companies have been major targets of trade secret theft before: in recent years there have been dozens of prosecutions in similar cases, including a case involving manufacturer TSMC in 2006. In 2017, four top executives of an unnamed 'semiconductor equipment manufacturer from the San Francisco Bay Area' were charged with stealing trade secrets for use at a competing company in China; according to the indictment, the technologies concerned 'high-volume production of semiconductor wafers for lighting and electronic devices such as flat-screen TVs and smartphones.' The sexual component of such cases rarely becomes public — partly because of the severe consequences for the executives themselves and their companies. But in Singer's assessment, the ongoing threat has become a kind of open secret in the industry: 'Many senior people in the industry know this is happening, and they effectively condone it,' he said.