China's Estimated 600,000-Strong Spy Machine Targets Chips and AI as Jensen Huang Scandal Rattles the West

WASHINGTON — The scandal surrounding former Nvidia chief executive Jensen Huang has renewed attention on China's vast intelligence operations. Western officials and analysts warn that semiconductors and artificial intelligence have become the main targets of Beijing's long-running effort to acquire foreign technology.

For years, Western governments have accused China of running covert campaigns to obtain know-how in strategic sectors from defense to agriculture. Security experts say the focus has now shifted firmly to the chips and AI systems that are expected to shape economic and military power for decades.

A Workforce That Dwarfs Western Agencies

According to a Wall Street Journal report published Friday, China has mobilized government agencies, private companies and ordinary citizens to gather intelligence. The goals are to boost economic growth, modernize the military, strengthen the ruling Communist Party at home and expand Beijing's global influence.

The methods range widely, from romantic "honey traps" and large-scale hacking to investments in strategic companies and funding for sensitive academic research.

One European intelligence agency estimates that China has about 600,000 personnel in intelligence and security roles, the Journal reported. That is far more than the U.S. or European intelligence services can field.

The work is led mainly by the Ministry of State Security, the Ministry of Public Security and the intelligence arms of the People's Liberation Army. These agencies often work with private contractors, professional hackers and ordinary citizens.

The imbalance is especially stark in cyberspace. In 2023, then-FBI Director Christopher Wray said China's state-backed hackers outnumbered the bureau's entire cyber workforce by at least 50 to 1.

Nicholas Eftimiades, a former U.S. Defense Intelligence Agency official who has written several books on Chinese espionage, told the Journal that the West is not used to this approach and lacks the defenses to counter it.

"It is an attack by a whole of society against the society," Eftimiades said in a separate interview, "not just against the CIA or the FBI."

Chips Now Rival Fighter Jets as a Prize

Analysts say Beijing's need for advanced technology has grown more urgent. President Xi Jinping is trying to revive a sluggish domestic economy while closing the technological and military gap with the United States.

Gregory Allen previously oversaw AI strategy at the U.S. Defense Department and now runs the consultancy Decisive Tree Research. He said the semiconductor industry has become one of the highest-value targets for Chinese intelligence.

For Chinese spies, Allen said, "they are as interested in stealing semiconductor technology as they are in stealing stealth fighter-jet technology."

Talia Peterson, a researcher at the Royal United Services Institute, a British security think tank, said both Xi and Washington clearly see AI as the "crown jewel," and that this is what is driving the global race for dominance.

Chinese officials have also stressed how much is at stake. In an essay in September, Minister of State Security Chen Yixin wrote that rapid advances in machine learning pose a direct threat to China's political, institutional and ideological security.

Recruiting Sources, Hacking Networks

Traditional human intelligence is combined with large-scale cyber operations. Analysts say the Ministry of State Security recruits widely, including within overseas Chinese communities. Its sources range from casual informants to insiders with access to sensitive military information.

Online operations are also extensive. On Oct. 8, the FBI and Justice Department said they had seized scanning and phishing tools used by a hacking group that U.S. officials link to the Chinese government. An FBI official called the operation "indiscriminate and reckless."

According to officials, the tools had been used against a U.S. power company, airports in Japan and Poland, Taiwanese universities and Taiwanese critical infrastructure companies. The FBI said the tools were run by a China-based information-security firm with Chinese government contracts.

U.S. officials have previously warned that China has planted malicious code in critical infrastructure in several countries, which could be activated in a conflict.

The Huang Case

The concerns have taken on new urgency since Huang resigned on Nov. 12 as Nvidia's chief executive and left its board. His departure followed reports of an extramarital relationship with Alice Huang, a woman linked to the Singapore-based company Megaspeed.

U.S. officials are concerned that Chinese intelligence may have tried to influence Huang through the relationship, according to the Journal. Authorities have also examined whether Megaspeed helped Chinese companies obtain advanced computing power despite U.S. export controls.

Alice Huang has not been charged, and the espionage allegations have not been proven.

Beijing has firmly rejected them. "The narrative about so-called Chinese spies is entirely based on groundless speculation — it is nothing more than slander and smearing," Chinese Foreign Ministry spokesman Guo Jiakun said this week.

Nvidia has said it has no reason to believe company secrets or U.S. national security were compromised.

Warnings to Business

U.S. and European intelligence agencies are urging private companies to take security more seriously to protect their intellectual property.

Officials say the risk is no longer limited to defense contractors and government agencies. Chipmakers, AI developers, universities and research labs are increasingly on the front line, as their technology becomes central to both economic competition and military power.

For Western governments, the Huang affair is a reminder that the contest over AI is fought not only in laboratories and markets but also through espionage, cyber intrusions and personal relationships.

China has consistently denied conducting state-sponsored espionage or hacking. It says the United States uses such accusations to contain its technological rise.