Jensen Huang Admits to Infidelity but Denies the $4.8 Billion Bill! Huang Le Is No Spy but a White Glove! $5.7 Million Buys $4.8 Billion in Chips, Alibaba Foots the Bill, Computing Power Rented Back to China! Circular Financing Breaks, Cloud Giants Face $200 Billion Annual Shortfall to Break Even! China Revenue Recorded as Zero, 20-40% Relies on China! Honey Trap? It's a Business Deal!

This article deeply analyzes the capital operations and supply chain insider details behind NVIDIA CEO Jensen Huang's admission of marital infidelity, pointing out that the so-called espionage case is actually a $4.8 billion chip transaction conducted through offshore companies and white-glove agents. The article breaks down the funding sources, Alibaba's investment, the operation of data centers in Malaysia, and the proportion of Chinese demand, while analyzing the current peak of the AI hardware cycle and the massive depreciation pressure faced by cloud giants.

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Observe things as they are, reject fragmented understanding. Let's chat properly with everyone about Boss Huang's gossip! Coincidentally, let's use this matter to chat about investment banking gossip. Let's talk about this matter simply first. Although this matter has been floating around for two days, Jensen Huang wrote a letter to all employees the day before yesterday, uh, admitting what? Admitting that he was unfaithful in his marriage, saying sorry to his family and to everyone. How does this sound like something said by a stock-trading failure, a desperate gambler? On the very same day, NVIDIA's board of directors announced the establishment of a special committee specifically to investigate one matter, which is to assess whether their own chief has become a target of foreign intelligence operations. And just a few days before that, the chairs of three committees of the US House of Representatives had already co-signed a letter to him, asking him to do a closed-door briefing in Congress on October 18. And the date of November 18 is also very interesting, isn't it just during the APEC meeting in Shenzhen? These past few days, I see the whole internet talking about the same story, uh, which is about beauty.

Spies using this honey trap to take down the godfather of Silicon Valley. We won't tell this story today. Today, we will still talk about the ledger. What is my judgment? It is that this female protagonist is not a lone spy at all, and Jensen Huang is not an old leather-jacket scumbag blinded by beauty. What kind of business is this? A business where both ends are calculated clearly, with the target being $4.8 billion worth of chips. And why must he do this business? The answer lies at the top of this AI cycle. Before we start, let's draw the boundaries of the evidence clearly for everyone. Saying she is a spy, where does the source come from? The source is that the media cited a classified memo from a US intelligence agency, which to this day still suspects that she was recruited by the state security department of the Chinese Communist Party. But to this day, neither the United States nor Singapore has prosecuted her on espionage charges. The Ministry of Home Affairs of Singapore even came out specifically to clarify what? Saying that she has never been investigated as a spy. What the United States is investigating is also the company behind her.

Today, the question of whether she is a spy is something we have no way to discuss. But the path that money has walked cannot be hidden. Today we won't guess about spies; we have straightforward and ironclad evidence. From Chinese court judgments to the black-and-white announcements of the Hong Kong Stock Exchange, all the way to digging into the business registration records of Singapore and Malaysia, plus an undercover report from a Wall Street short-selling firm. Of course, short-selling firms make money by crashing the market. The tips she reported, I will pick out separately to talk about. Uh, how much to believe is up to everyone to weigh yourselves. First, let's talk about this female protagonist Huang Le, whose English name is Alice, in her early forties, uh, a native of Hunan. What does she hold? It is Hong Kong permanent resident status. What did her early resume write? That she worked as a journalist at Hunan TV and CCTV. But afterwards, The New York Times asked Hunan TV and got the answer that they had never heard of this person. The path behind is even more interesting. According to her own public resume, a liberal arts master's degree in media, in 2008 she directly entered HSBC Hong Kong's private bank and rose to vice president. In 2013, she again

Moving to CITIC Securities, he became a vice president in the financial sector of securities. Well, today I am going to tell you some gossip. What on earth do these two positions in investment banking actually do? Anyone who understands the unspoken rules of Chinese investment banking knows how things like private banking and brokerage lending businesses are actually played out. Most of the time, they just recruit an outsider with resources, and then directly slap on a VP title—meaning vice president. Why are they recruited? Absolutely not to sit in the office and calculate financial models. The unspoken rule is to take business cards to banquets to accompany bigwigs, and then build social circles. What kind of work did Hong Kong private banking do back then? Helping mainland bosses move money across the border. And that stock pledge department at CITIC was just lending money and adding leverage to big players. What kind of work did they all do? They acted as matchmakers for the elites and their capital. Therefore, his skill was never finance, but networking. To put it bluntly, what was he? Just a broker. And it was right there at CITIC that he met his later boss, Kang Wei, the founder of Shanghai Hexi Investment. Back then, he claimed to be China's youngest public fund general manager.

After the 2015 stock market crash, he left CITIC and went straight to Hexi. His title was executive director. What kind of role did he actually play in Hexi? This brings us to another history of lawsuits. Hexi later had a bonus lawsuit with another partner. To win, Hexi submitted its own internal documents to the court. What did the documents show? Kang Wei directly made the executive decision to assign twenty-five percent of Hexi's equity to Huang Le, for him to take over. In 2016, he partnered with Kang Wei's company to register a new company with a registered capital of six hundred million, and he was the legal representative. Just a month later, this new company took away forty-eight percent of Hexi's shares. In the evidence, Hexi directly referred to it as what? A shareholding platform held by company legal representative Huang Le. Now the funny thing comes in: he was listed as the fund manager of four funds under his name, but in the Asset Management Association of China records, he didn't even have fund qualification. Without this qualification, he was listed as managing this money, and under his name was also placed nearly combined.

Half of Hexi's shares. This kind of arrangement is the pure playbook of a white glove. To put it bluntly, he was someone who stepped forward to hold shares and sign documents on behalf of the real bosses. What was his relationship with Kang Wei? That goes without saying. Seeing this, I actually dare to conclude that Huang is just a template—a template of someone who can survive and climb up by relying on men. This is the ecosystem of Chinese investment banking. By the way, let me correct a widespread rumor on the internet. What did the internet say? It said that because of this twenty-five percent equity, he directly fell out and got into a lawsuit with Kang Wei. In fact, the verdict clearly states that the person suing Kang Wei was another partner, and he was just an assignee mentioned in the evidence. What is the most valuable skill of a white glove used for? It is used to ensure that when things go wrong, the behind-the-scenes bosses can make a clean cut. Back then, Hexi helped Guo Heping, the boss of Phicomm, add leverage to buy into an A-share listed company, mobilizing a total of 1.8 billion, and even though his shareholding exceeded the legal limit, not a single announcement was issued. In early 2018, the China Securities Regulatory Commission issued a fine.

Hexi and Kang Wei were jointly fined 18.1 million. The mess Phicomm made later was even bigger. What was the name of the financial platform Phicomm tied up with—something like Linbi Finance? Didn't it crash later? The illegal fundraising amount determined by the court was over 83 billion, and as a result, Guo Ping was sentenced to life imprisonment. What about Huang Le, who directly participated in this project? In July 2017, before the fine was even handed down, he had already directly withdrawn from the shareholding platform and also resigned from his position as legal representative. The person who took over was still someone surnamed Huang, named Huang Yu. As shown in the business archives, these two had already opened a company together more than ten years ago, so he was not on the penalty list. He was also not included in the subsequent judicial accountability, and he cleanly took his Hong Kong identity and went straight overseas.

Let's look at his first deal overseas, which clearly demonstrates this trade of his. The story starts with a small gaming company. In 2015, a listed company called Century Huatong spent four million to buy a start-up small gaming company. At that time, this company had been established for just over a month, and the funny thing happens—truly, Buffett would have to bow to Huang Le as a master after seeing his record. Right after buying this company, the profits miraculously and violently surged, and it just happened to help Century Huatong's subsidiary meet the expected valuation adjustment mechanism target. What is a valuation adjustment mechanism? It is the pledge signed at the time of acquisition: if the target is met, I give you money; if not, you have to compensate me. But just as this adjustment period expired, its profits immediately plummeted by seventy percent, and it instantly became a mess. However, right at this moment, Hexi's partnership suddenly pulled out a sky-high price of five hundred million to take over this mess. Something worth four million was turned around and sold for five hundred million, and just this single transaction helped Century Huatong.

From a decline in profits back then, it was forcefully pulled up to a massive increase of fifty-five. Hexi, of course, was not a sucker; they were just waiting for the next person to take the baton. What was the next baton? By 2019, this asset was bundled with other gaming companies to be sold to a Hong Kong-listed company called 7th Road. Well, the price doubled to one billion RMB, and it all had to be settled in cash. The problem was that Hexi had invested in 7th Road in the early years, so the two sides could be considered related parties. Selling directly would easily be scrutinized as a related-party transaction. So what to do? Huang Le registered a shell company in the British Virgin Islands, and the assets were first transferred to her name. Twenty-three days later, she signed a contract with 7th Road. In the original announcement on the Hong Kong Stock Exchange, 7th Road stated in black and white that Ms. Huang Le was an independent third party. However, the same announcement's appendix stated that the Hexi-affiliated partnership was the ultimate controller of this asset and also Huang Le's person acting in concert. That is interesting. These two sentences printed in the same document—isn't that a typical case of tunneling? Starting with four million, the assets were flipped twice and stuffed into a one-billion-cash transaction, and in the end, she was still the actual beneficiary. It is also said that when the gaming business reached its end, Huang Le and the capital players behind her changed tracks, but the methods remained exactly the same. In October 2022, the U.S. began restricting the export of high-end AI chips to China. Five months later, 7th Road sold one of its Singaporean gaming subsidiaries to Huang Le's offshore company, renamed it Magic Speed, and changed the main business from gaming to keeping up with current events—it became a cloud service provider. But there was a snag: a Chinese boss plus the foundation of a Chinese gaming company makes it very difficult to pass NVIDIA's customer background check. Therefore, in 2023, a Singaporean businessman based in Shanghai registered a new shell company just before the new round of U.S. chip sanctions took effect.

Before that—specifically before November 10th—all shares of Meta Speed were transferred to this shell company, and Huang Le resigned from her director position on the same day. Just four days later, she obtained the qualification of an official NVIDIA cloud partner. What is this qualification for? It means being a cloud vendor certified by NVIDIA, which allows them to be at the front of the line when acquiring these high-end chips. From that day on, no matter who asks NVIDIA, they can reply: This company has no Chinese shareholders. And what did the short-selling firm Cooper quote from the company's current employees? They said that this Huang Le is actually still our boss. Another suspicious point here is: where did the money to buy the chips come from? After all, 4.8 billion is not a small amount, and it is in U.S. dollars. The following set of figures comes from public industrial and commercial archives, customs records, and company statements dug up by the short-selling firm. At the end of 2023, Meta Speed's cash on hand was only 5.7 million U.S. dollars. Over the next two years, its Malaysian subsidiary imported nearly 4.8 billion U.S. dollars worth of NVIDIA equipment.

Moreover, more than half of it was the latest generation under restriction. If you use 5.7 million in capital to conduct a 4.8 billion business, you have leveraged it more than 800 times. Shouldn't everyone be curious about who provided the money? Well, the company's books are very interesting. At the end of 2024, a sum of over 2.9 billion U.S. dollars in received refundable deposits suddenly appeared on the statement, without stating who it was from. Where is the answer hidden? It is hidden in the Malaysian business registration. On June 18, 2024, this Malaysian subsidiary pledged all existing and future equipment—note that at this time, the future equipment did not even exist yet—to a Singaporean company called Apex. Singaporean files show what? Singaporean files show that Apex is 100% controlled by Alibaba. The registered business is only one sentence: providing procurement services. Let's look at who supplied the goods. More than 4 billion dollars worth of goods came from a server company in California called Ivers. You definitely haven't heard this name, but you definitely have heard its original name: Inspur Systems. The parent company is Inspur, yes, that famous volatile stock. However, in March 2024, it was placed on the U.S. Entity List, which is the export blacklist. Two months later, it changed its name. So why wasn't it blocked along with it? Because the U.S. blacklist's rule on guilt by association is that the parent company must hold more than 50% for the subsidiary to be automatically blocked. Inspur Group used a holding company to keep the shareholding ratio precisely at about one-third, just enough to exploit the loophole of the 50% red line. If we piece these files together, the structure of this channel is very clear. Alibaba provides the money, Inspur's U.S. company provides the goods, the Singaporean shell company provides the chips, the chips lie in the Malaysian server room, and the computing power is rented back to China via the network, while Huang Le is the adhesive in the middle process. Although the chips do not enter China, the computing power has entered China. However, did Huang Le violate the regulations? She actually did not violate them. This is under the U.S. export controls at the time.

It is a gray area inside, with no explicit prohibition. However, the Americans were actually scratching their heads at the time, saying, 'Did you really ban it? Didn't you ban chips?' And so they started pouring this sauce on it.

Well, they started going to the site for verification, and once they checked, the accounts didn't match up. At the end of 2024, officials from the U.S. Department of Commerce went to the data center in Malaysia to inspect it, and what did they see? They saw a large batch of equipment still sealed in boxes, completely unopened. Moreover, the number of chips in the data center didn't match the customs data. What was the customs record? It was 136,000 Nvidia chips. After Nvidia sent its own people to take inventory, they only saw a few thousand of the latest generation chips in the data center. But what was Nvidia's explanation? That they weren't installed, they were all in the warehouse, they had all been counted, and there was no evidence that they had been shipped to China. But how many were actually in the warehouse? They didn't disclose that either. That short-selling firm also mentioned another thing, which is that a data center under Bain Capital directly cleared out Mike Speed this April. The reason was also very ridiculous: they discovered that what he had placed on the racks were just fucking fake servers, meaning empty shells just for show, just like putting fake books on a bookshelf behind you. The real goods had already been moved away. However, this point is cited information from the short-seller, and I am marking it as such, as usual.

So, having said this, there is a question that cannot be bypassed. Nvidia's quarterly revenue is around $96 billion. People might think, is it worth it for this $4.8 billion to give a company with such a suspicious background qualification approval in just four days? And even let the boss himself come out to endorse it? Is it worth it? Let me tell you, it is very worth it, because the answer is not in Singapore, but in North America. The performance machine that supports Nvidia also started to have problems this year. What is this machine? It is the circular financing we mentioned before, which I call 'stepping on the left foot to lift the right.' Look, Nvidia, along with venture capital and private equity funds, invests money into AI startups and computing power leasing companies. These companies get the money and turn around and use it all to buy Nvidia chips. In other words, the invested money goes in a circle and becomes their own revenue. We have specifically talked about this before, so I won't go into too much detail today. This year, this circle has started to crack at both ends.

Let's look at the equity side first. In the first half of this year, the amount of venture capital received by global AI startups was $407 billion, which also set a record. But don't look at the scale; the capital composition is highly concentrated. To what extent? OpenAI and Altrampic alone took $217 billion, which is more than half. Although the money didn't decrease, most of it only went into the pockets of these two, and the financing for the vast number of small and medium-sized companies is becoming increasingly difficult. Let's look at the debt side. The leader in computing power leasing, Core Web, had a second-quarter revenue of $2.6 billion, but its capital expenditure was $9.4 billion. The huge gap was all covered by borrowing. Just look at the interest expense—is it terrifying? It reached $640 million in one quarter. What does that mean? It means for every four dollars earned, one dollar has to be used to pay interest. Then, in the middle of last month, its bond yield soared to 15% to 16%. What does this number translate to? The market is already pricing this company based on the possibility that it might not be able to pay back the money.

Another part of Nvidia's revenue comes from cloud giants like Amazon, Google, Microsoft, and Meta. Everyone knows this. But the accounts on this side are even more intense. Goldman Sachs released a report on September 24th, adding Oracle and Speed X to these four. The total market expectation for the capital expenditure of these six companies this year is $806 billion, which is almost double compared to last year. Goldman Sachs then calculated a break-even account. Look, AI chip servers will be scrapped after a few years of use. If the huge capital expenditure invested is amortized over their lifespan, these six companies alone would need to earn an additional $308 billion a year just to cover the hardware depreciation hole, and that would just be breaking even. Note, that is just breaking even; there is not a single cent of return yet. What is the reality? According to the second-quarter books, the annualized cloud revenue earned by several cloud vendors above the 2024 baseline is only about $70 billion. Even if we include the third-quarter report released at the end of October, this number has just touched around $100 billion, still more than $200 billion short of the $308 billion break-even line, and it's like this every year. So how is this hole filled? Isn't it all by finding ways on the books first?

Microsoft is being extremely cunning. Back in July, they changed their accounting estimate, extending the useful life of data center buildings from 15 years to 25 years. The buildings remain the same, but their lifespan has been lengthened, so the annual depreciation cost recorded decreases accordingly, and the reported book capital expenditures were reduced by $15 billion. What is the current situation? It is that the money for buying shovels has already been spent, but the gold being dug up is not yet enough to cover the depreciation of these shovels. Moreover, there is now a classic cycle-peak signal, and this signal is sky-high M&A. Let me briefly explain to everyone why sky-high M&A generally occurs when a cycle peaks: when a company's or industry's own performance can no longer grow organically, industry leaders take high-valuation stocks and cash to go out and buy growth. What is the logic behind this? It is a logic of performance integration. When is integration needed? When organic growth capacity is no longer sufficient. Then, on the 2nd of this month, chip company Marvell announced the acquisition of optical communications company Lumichem for $11.5 billion in an all-stock deal.

On the day of the announcement, did you all see the market sentiment? The stock prices of both companies dropped, one by 12.7% and the other by 18.6%. Both the buyer and the seller fell together; this is a manifestation of market sentiment. Including the veteran chip giant Texas Instruments, which recently also threw down $7.5 billion in all cash to acquire which company at a high premium? Wireless chip company Sequans Communications. Now the entire semiconductor circle is relying on this high-priced annexation of peers to artificially prop up growth. Now, if we combine these two lines, you will understand why that $4.8 billion was valuable. NVIDIA's gross margin for the first two quarters was 75%, and the guidance for the third quarter was lowered to 74%. There are actually many reasons for this: part of the reason is the price increase of memory, and cloud giants are also building their own chips to divert these orders. The revenue contributed to NVIDIA by several major manufacturers this quarter was only 13% higher than the previous quarter, and the ones truly propping up the scene were another group of buyers—namely, computing power leasing companies that borrowed money to buy chips and act as secondary landlords, plus various national governments undertaking national-team AI projects. Hey, this bunch of bastards threw down 25% in a single quarter, but this main group has a shortcoming: they don't have much money in their own pockets, and buying chips entirely relies on borrowing, buying on credit, and even requiring NVIDIA to personally step in and act as their guarantor.

Do you remember that operation back in August? NVIDIA pulled together six Wall Street institutions to sign a letter of intent. What does an intent mean? It means mobilizing $500 billion in external funds to help customers buy chips. Jensen Huang publicly stated that $12.5 billion of this could be directly underwritten by NVIDIA. To put it bluntly, what does this mean? It means that if these chips cannot be used, sell them back to me at a 30% discount—hey, I will buy them at 30% and take them back. So this is extremely cunning. Then when you look back at this Singapore channel, Alibaba first paid the deposit and prepayment, and then paid in full with spot exchange for delivery, without needing NVIDIA to invest a single cent of equity, nor needing NVIDIA to guarantee a single cent of debt. This is the cleanest cash in the entire order pool. What's even better? It is the accounting standard: NVIDIA records this revenue based on the headquarters location of the registered customer. Since your goods are sold to that Inspur-affiliated company in California, this transaction is counted as US revenue, so in its financial reports it can write very, very self-righteously: hey, assuming revenue targeting Chinese data centers is zero. However, looking through the penetration provided by short-selling agencies, 20% to 40% of its data center computing power revenue is actually backed by demand from China.

Everyone, recall again: what is the single sentence Jensen Huang has repeated most frequently in Washington over the past two years? He says that the tighter the controls, the faster China will build things itself. This statement is fucking complete bullshit! For the most advanced AI chip, over 85% of just the design software is directly controlled by three European and American companies. Look at extreme ultraviolet lithography machines: currently, only ASML in the Netherlands can build them in the entire world. The bulk of photoresists is in Japan, lenses are in Germany, measurement technology is only available in the UK, and finally, they still have to be sent to TSMC for production and packaging. The precision of this manufacturing process far exceeds the difficulty of building a large passenger aircraft. With China's current fucking messy state of 919 manufacturing, I really don't believe this stuff can be hammered out just by throwing money at it. Really, for this kind of thing, no country—including the United States—can do it; wanting to build it yourself is fucking daydreaming. Therefore, this statement is not an industry judgment; it is a business strategy. What he needs to protect is this demand from Chinese customers. So, from beginning to end, my judgment of this matter is a two-way exploitation. Huang Le's side wants Jensen Huang's face, and Jensen Huang wants Huang Le's money.

I also dug up a report from Taiwanese media from two years ago, which is quite interesting. It says that in June 2024, Huang Le attended a computer exhibition in Taipei, and at a customer gathering in a bar, in front of a senior executive, what did he say? He said, "I bet I can get Jensen Huang to come over." And sure enough, Jensen Huang's mother actually came, sitting right next to them drinking and taking photos. Then, in that very same month, the document mortgaging all equipment to Alibaba's subsidiary was signed, and major procurement was subsequently initiated, so the relationship is very obvious. What NVIDIA wanted on this end was orders, plus the phrase "I was not aware." In my view, Old Huang has already set up three layers of firewalls. The first layer is the shareholders; nominally, it is a Singaporean shell company, so on the surface, the customers have no Chinese shareholders. The second layer is delivery—the goods are sold to a California company, but the destination is Malaysia, and once delivered, revenue is recognized. As for who gets the subsequent computing power, that is the customer's own business. The third layer is this letter on November 8. What is Congress questioning? National security and loopholes in export controls. What did he admit first? He said, "I am sorry to my wife, but no classified information was compromised." You see, Old Huang is not stupid; he had already designed everything from the transaction structure to the narrative reasoning.

So my conclusion is that this is not a honey-trap story—at the very least, it is not a simple honey-trap story, and even less is it one of those clichéd stories where Old Huang gets set up by a CCP swallow. Because it's not like NVIDIA hasn't done on-site due diligence; the conclusion of the due diligence wasn't cash sound, it was all in the warehouses in Malaysia. And what is the sentiment in tech stocks right now? It's simply that as long as your performance doesn't jump upward, for every 1 percent drop in revenue, the stock price will tumble head over heels. The reason is simple: current pricing includes expectations of growth. Once the growth factor—the largest contribution to valuation—can no longer prop up the stock price, what follows won't be a mere adjustment, but a revaluation. I don't believe in any conspiracy theories, and even less do I believe that the CCP could spend 10 years cultivating something like this just to fool Old Huang. What kind of virtue does the CCP system have? Doesn't everyone have a fucking clue? Use people when needed, discard them when not; Huang Le's job profile is precisely that of an intelligence agent. Do I absolutely believe he is colluding with the CCP? Yes. But to say the CCP cultivated him with a specific purpose? I don't believe that, especially since 10 years ago NVIDIA didn't have much of a standing in the industry anyway. If the CCP had the ability to foresee and calculate like that, it wouldn't have ended up in this fucking state today.