On November 8 the New York Times reported a relationship between Jensen Huang and a Chinese national whom US officials consider a possible intelligence asset. The board opened a review the same day and said it saw no sign that secrets were compromised (board statement). Four days later Huang stepped down as CEO and left the board. CFO Colette Kress is now interim CEO (Forbes). The allegations are still press reports under review. The market didn't wait: from its October peak of $5.77T, Nvidia's market cap has slid to roughly $4T (MarketPulse).
The scandal is the least interesting part. The real question is what Nvidia lost along with Huang. Our answer: two balances. One is in the filings, between suppliers and customers. The other is in Washington, between the people who wanted to sell chips to Asia and the people who wanted to stop it. Neither was Huang's alone, but both leaned on him to a large degree. And they meet at a spot that hardly anyone talks about.
Balance one: years for suppliers, weeks for customers
At the end of July Nvidia owed its suppliers $279B in future payments, mostly for TSMC capacity and memory. That's up from $119B a quarter earlier: the commitments grew 2.3x in three months, while revenue grew 18%. $92B is due by late January, when Nvidia's fiscal year ends, and $187B after that, about $87–88B in each of the next two years and the rest further out (10-Q).
Customers look very different. The next few quarters are fine: GPUs sell out, and real orders cover them. But customer contracts that run longer than a year add up to just $3.2B of revenue still to be booked, and 39% of that comes within the next twelve months. That leaves about $2B for the years when Nvidia owes suppliers $187B.
Most of that $187B pays for capacity for Rubin and the generations after it. Customers will order those chips the usual way, with purchase orders a few quarters before delivery. So for now, nobody has signed for most of what Nvidia has already promised to pay for.
What could make a customer hold back? The filing names the two obvious reasons: no data center ready to put the chips in, or not enough capital. And customers are already stretching their side. Nvidia's receivables swelled to $63.1B, and the average customer now pays in 60 days, up from 45 (CFO commentary). Five customers owe 70% of that. Some large ones get as long as a year to pay. They do prepay too, and not trivially: $15.6B in advances over six months. But only $2.8B was left by the end of the quarter, so that's prepayment for weeks, not years.
And the famous "trillion dollars of orders" for Blackwell and Rubin that Huang talked about in the spring? It isn't in the filings. It's a statement.
Can Nvidia back out?
Partly. Supplier deals can be cut, pushed back or resized before firm orders are placed. But that costs money, and Nvidia already knows roughly how much. Even in the middle of a shortage, it booked $2.1B in the first half of this year for excess inventory and purchase commitments. In spring 2025, when the H20 was cut off from China, the bill was $4.5B in a single quarter.
That's what a hiccup costs. A real turn costs more, and there's a precedent. In 2001 Cisco had promised suppliers it would buy parts no matter what, while customers ordered with a cushion. When demand turned, Cisco wrote off $2.2B of inventory (CIO).
"Every shortage looks like this"
The fair pushback: isn't this just what happens when demand outruns supply? Mostly, yes. In a shortage, whoever buys the scarce thing locks itself in. Whoever sells it doesn't have to.
Look at memory right now. Micron has been discussing five-year deals with customers, and Samsung has weighed moving from quarterly contracts to three- and five-year ones (Bits&Chips). Big tech companies offered SK hynix 30–40% prepayment, money for ASML tools, even whole lines in a new fab (Reuters via Korea Times).
Nvidia plays both roles at once. It buys memory, so it signs long and pays up front like everyone else. It sells GPUs, so it doesn't have to lock anyone in. That suits Nvidia: every new generation sells at a new price, and it keeps the right to decide who gets chips first. Customers don't mind either. GPUs age out in about eighteen months, and the hyperscalers don't want to lock themselves out of their own chips.
So the asymmetry isn't Huang's invention. It's the shape of a shortage. What was his is the scale, three years out and two-thirds of annual revenue, and the way it was run.
Run by hand
Shortages have a well-known disease. When buyers expect rationing, they order more than they need, hoping to get at least enough. When the shortage ends, those inflated orders vanish first. Supply chain researchers call it the bullwhip effect (Lee et al., 1997). The cure sounds simple: give chips to whoever really uses them, not to whoever orders the most. In practice that takes someone who knows who really needs what.
At Nvidia, that someone seems to have been Huang. On November 12 Dylan Patel of SemiAnalysis described on CNBC how Huang personally visited even small suppliers of critical parts to talk them into giving Nvidia their capacity (we only have retellings, not a transcript). Two days later Elon Musk weighed in:
"Jensen drove supply chain brilliantly at Nvidia, but many of those deals were a handshake with Jensen, not a written contract… Without Jensen, at least some of those critical deals will be lost."
And then, about himself:
"If Jensen gave me his word about compute delivery or I asked for components to be accelerated, he always came through… Sure, we'd put together a purchase order at some point later."
(Reuters)
The first post doesn't fit the numbers: the supplier deals are on paper, $279B of them. The second one explains it. Musk is talking as a customer. He got Huang's word first and the paperwork later. The handshakes weren't with TSMC. They were with buyers: who gets chips, when, and who jumps the queue. That's the soft side of the balance. Remember Musk, by the way. He comes back later in a role you might not expect.
Neoclouds: the long contracts nobody else signed
The word decided who got GPUs. But someone still had to sign the long contracts that the hyperscalers wouldn't. Neoclouds did. They buy almost only Nvidia, and they sign multi-year deals with OpenAI, Microsoft and others. CoreWeave alone has $132.3B of them, and $47.5B of debt (CIO.inc).
To make lenders comfortable with that debt, Nvidia put its own balance sheet underneath. It promised to buy CoreWeave's unsold capacity through 2032 (CoreWeave 8-K). It has another $36B of similar deals with other clouds, and a guarantee of up to $105B on data center leases for OpenAI. Analysts add this up to as much as ~$164.5B, about 72% of Nvidia's equity. That's the worst case, not the expected loss (xenospectrum). Kress herself calls the structure "a minimum revenue guarantee that gives lenders the confidence to underwrite the project."
What would Nvidia do with compute nobody else wants? Use it. Separately from the backstops, it already rents $29B of cloud capacity to train its own models, from Nemotron to robotics and self-driving software. And the backstops work like insurance: under those deals the clouds can sell capacity to anyone who pays more, so Nvidia only gets what's left over.
So the loop goes like this. Nvidia guarantees, the neocloud borrows, and the borrowed money buys Nvidia GPUs. If end customers don't show up, Nvidia takes the capacity. Demand finally has a hard side, but it rests on the same seller.
That's the first balance. The second one is about who Nvidia is allowed to sell to at all.
Balance two: Washington and Beijing
For two years Huang was the chip industry's main voice at the White House. He argued, loudly and often, that export controls simply hand the Chinese market to Huawei. And he won: in December 2025 Nvidia got permission to sell H200s to China, with 25% of the money going to the US government.
Here's the check that changes the political story. That deal is now worth almost nothing. Beijing is holding back import approvals, and in early November Reuters reported about 600,000 H200s stuck in Hong Kong waiting for them (Reuters via Kuwait Times). Nvidia's own guidance assumes no China data center revenue at all. In money, the open door to China is roughly zero.
Where politics really touches Nvidia's sales is a grey zone. Chinese companies can't buy top chips, but they can rent them remotely from clouds in Singapore, Malaysia and the rest of Southeast Asia. In the filings that just looks like strong sales to Asia. How big this demand is, nobody outside knows. Not us, not the analysts, maybe not even Nvidia. Keep that in mind for everything below.
One such cloud is at the center of the scandal. The woman in the NYT story, Alice Huang, was an executive at Megaspeed, a Singapore company that buys Nvidia chips (NYT via Star-Advertiser). Reported figures for its purchases run from $2B to $4.8B, none of them confirmed. Megaspeed and Nvidia deny any wrongdoing, and no one has been charged (Tech Insider).
This is where the two balances meet. The grey zone lived on the shortage, like everything else. And it lived on political cover: the White House listened to Huang more than to the people who wanted to shut it.
How the second balance broke
Many retellings get the order of events wrong, and the order matters.
The warnings came first. According to the Times, Marco Rubio, who is both Secretary of State and national security adviser, oversaw a classified memo on Huang's ties this spring. In May, on Air Force One on the way to Beijing, he briefed Trump himself. It was at least the second such warning in seven months. Trump wasn't especially moved, the paper says, and Huang flew to Beijing with him.
Then the policy turned, still before any scandal. On November 5, Axios reports, Trump met his team in the Oval Office about chips leaking to China. Treasury Secretary Bessent, Rubio, Trade Representative Greer and Defense Secretary Hegseth pushed for a crackdown. Commerce Secretary Lutnick objected. Musk sided with the hawks. Trump's answer: "Let's get it done." Lutnick then stalled, for at least the third time this year (Axios). Commerce partly disputes the account.
Only then came the leak. The NYT story ran on November 8. The next day Trump said he hadn't heard about it in May and called Huang "a very honorable man." On November 12 Huang left. Trump praised his "fantastic job" and suggested Tim Cook, who stepped down at Apple this spring, as the one person who could replace him. The Washington Post later reported that Rubio's memo was based on a CIA report, and one person told the paper that Rubio had made its conclusions harsher before it reached Trump (Washington Post). Who leaked it, the paper doesn't say.
Why Trump didn't save him
Trump had known for months and didn't act. Then, four days after the story went public, he let Huang go. We can't see inside the Oval Office, so here are the explanations that fit, from strongest to weakest.
The cost went up and the value went down. Defending Huang now meant defending "the CEO from the CIA memo," days after midterms the Post itself described as a Democratic sweep (Washington Post). Meanwhile Huang's political value had already fallen. He was useful as the man who could open China, and China wasn't opening. Beijing itself was keeping the H200 out.
His own team had already closed ranks. On November 5, before the story broke, Treasury, State, the trade representative, the Pentagon and Musk were all on one side. Only Lutnick was on Huang's. Trump rarely goes against a united national security team, and he'd already said "let's get it done."
There wasn't much for him to do. Nvidia's board decides who runs Nvidia. Trump commented, and the comment says something. Tim Cook reads less like a plan than a hint at the kind of CEO he'd like in that chair: famous, safe, with a good line to the White House.
The first two fit the facts best, and we hold that with medium confidence. Here's how to tell: if they're right, the November 5 crackdown gets carried out and Lutnick gives way. If China policy doesn't change, the scandal was about one man, not about the line.
Is Rubio really that powerful?
Yes, but not in the way the headlines suggest. Rubio holds two jobs at once, so he runs the process that decides what intelligence reaches the president and in what words. That's real power, built into the structure. It's also why "Rubio toppled Huang" goes too far. By Axios's account he was one of five voices in the room on November 5, and Trump made his call with all of them there. Rubio didn't create the mood against Huang. He put it on paper in a form nobody could ignore. That he hardened the CIA's wording rests on a single anonymous source.
And Musk? On November 5, according to Axios, he backed the crackdown on chips leaking to China. Nine days later he was calling Huang irreplaceable and said he'd sign a petition to bring him back. Maybe there's no contradiction: Musk can want Huang the supplier and not want Huang the China lobbyist. Maybe it's positioning in the fight for Trump's ear. We'll leave it as an observation.
What's left
Both balances are now in other hands. The supply chain is run by a CFO, and the political cover is gone. That doesn't mean anything breaks tomorrow. Nothing in the P&L has changed yet, and the chips are still sold out. What has changed is who holds the parts that never made it onto paper.
The market has noticed, though not quite in the way the headlines suggest. At the end of January Nvidia traded at 38 times its yearly profit. Today it's about 20. Most of that drop isn't the price: since January, profit over the last four quarters grew 61% while the market cap fell 14%. Only the slide from the October peak is all price.
Nvidia's P/E has halved this year, mostly because profits grew
P/E = market cap ÷ net income · fiscal years end in late January
The more telling number is further out. On analysts' average estimate for the year to January 2028, Nvidia trades at about 10 times profit. Either the market sees a bargain, or it doesn't quite believe next year's numbers. Our read leans to the second: next year's profit rests on exactly the orders nobody has signed yet.
The CFO has been here before. In 2022 Nvidia took $1.32B of charges, and Kress explained them at the time as "previous long-term purchase commitments we made during a time of severe component shortages" (The Register). And she seems to have pushed back this time too. According to the Wall Street Journal, in August Huang wanted Nvidia to put up as much as $250B of guarantees for OpenAI's data center project in Ohio. Kress spent weeks renegotiating and cut it roughly in half, to the up-to-$105B that ended up in the filings. The paper says the dispute turned personal (WSJ via SiliconReport). So the person now in charge is the one who already tried to shrink the loop.
Washington is moving fast. Lawmakers are pushing three China chip bills into the annual defense bill: the AI Overwatch Act, the Match Act, and the Chip Security Act, which would require tracking where chips end up. Representative Brian Mast says Huang's lobbying weight has dropped "100%" (AI Weekly).
Where the chips go
Now put the two halves together. This is our scenario, not a forecast, and it rests on a number nobody has.
If Washington really shuts the grey zone, the chips that went to Southeast Asian clouds serving Chinese customers will need new buyers. The obvious candidates are Western neoclouds, the same ones that already sign the long contracts. But neoclouds buy with borrowed money, and lenders want Nvidia underneath. So the guarantees could be asked to stretch at exactly the moment the person who already cut them back is running the company. That's a second-order guess. If grey demand turns out to be small, it simply doesn't happen.
Some effects are easier to call:
- Asian clouds with Chinese customers will face questions about who those customers really are, the kind of checks banks run on their clients. Some will lose their supply.
- US and European neoclouds, CoreWeave and Nebius among them, look like the natural home for any freed-up chips, on Nvidia's terms.
- GPU rental prices feel it if grey demand fades while supply keeps growing.
- Contracts will probably get more formal with a CFO in charge. That's not a collapse: demand is real, and customers will likely put on paper roughly what they already promise in words. What changes is the edges: fewer favors, less queue-jumping of the kind Musk describes, fewer new guarantees. The flip side is a chance for AMD and the hyperscalers' own chips to offer what Nvidia never did, a long contract with guaranteed volume.
- Memory makers will feel any change first. HBM prices lean heavily on Nvidia's orders, and those orders, remember, can be pushed back.
What's signed won't disappear with Huang. What's in question is everything that worked without a signature: the queue, the speed-ups, and a seat in the room where America decides who gets to buy.