THERE was a time when international espionage involved trench coats, microfilm, secret rendezvous and mysterious women who invariably disappeared before breakfast.

Today, apparently, it involves artificial intelligence, multibillion-dollar semiconductor companies and an extramarital affair.

Somewhere, John le Carré must be kicking himself.

Jensen Huang, the billionaire founder of Nvidia, has admitted to being unfaithful to his wife. Ordinarily, this would be a matter for his family, rather than the United States Congress.

Unfortunately, American intelligence officials reportedly believe that the woman identified in news reports, Alice Huang, a former executive of Singapore-based Megaspeed International, was connected to Chinese intelligence.

Nvidia has launched an independent investigation. Beijing rejects the espionage allegations, while Nvidia maintains that it has no reason to believe corporate secrets or American national security were compromised.

No espionage has been established. That distinction matters.

Nevertheless, the affair has provided an almost theatrical illustration of the paranoia surrounding the US-China technological confrontation.

The man whose processors are helping power humanity's artificial-intelligence revolution now faces questions about a possible intelligence operation that no amount of computing power could have predicted.

Apparently, when superpowers are determined to gain a technological edge, even the bedroom becomes a potential theatre of strategic competition.

Which brings us, rather unexpectedly, to Penang.

From Nov 6 to 8, while the world's technological establishment was digesting the Nvidia controversy, Penang executive councillor Zairil Khir Johari was in Beijing presenting an intellectually provocative paper at the Beijing Forum 2026, co-hosted by Peking University.

Its title was Beyond the Dark Forest: Technohegemony, Strategic Hedging and the Case of Penang.

The setting could hardly have been more appropriate.

Here was a Malaysian politician, standing at one of China's most prestigious academic institutions, explaining why a small Malaysian state had managed to accommodate competing American and Chinese technological interests within the same industrial ecosystem.

Not by choosing sides. Not by performing the diplomatic equivalent of proposing marriage to Washington while maintaining a discreet relationship with Beijing.

But by making itself useful to both.

There is something genuinely refreshing about a Malaysian politician arriving at an international academic forum armed not with ceremonial platitudes or a PowerPoint celebrating investment approvals, but with a serious argument grounded in history, economics and international relations theory.

Zairil began with Chinese science fiction.

In Liu Cixin's celebrated Three-Body Problem universe, technologically advanced civilisations inhabit a cosmic dark forest, where nobody can be certain of another civilisation's intentions.

Survival, therefore, depends on preventing potential adversaries from becoming powerful enough to destroy you.

One civilisation deploys an extraordinary device, the sophon, to obstruct humanity's scientific advancement.

Zairil identifies a disturbing parallel with contemporary geopolitics.

America increasingly attempts to restrict China's technological development through semiconductor export controls. China responds by exercising its influence over rare earths and other strategically important materials.

The objective is no longer simply to outperform your competitor.

It is to prevent your competitor from acquiring the means to outperform you.

Washington calls it national security. Beijing calls it containment. Semiconductor manufacturers call their compliance departments. In a panic.

History offers an inconvenient reminder that America's enthusiasm for technological containment did not begin with China.

During the 1980s, Washington became deeply alarmed by Japan's semiconductor dominance.

Japan was not a communist adversary threatening the American political system. It was America's closest Asian ally.

That did not stop President Ronald Reagan from imposing punitive tariffs of 100% on selected Japanese products in 1987 following a dispute over semiconductor trade commitments.

Apparently, international friendship has its limits when your best friend starts manufacturing better memory chips.

The Japanese experience demonstrates that technological supremacy is not merely an economic ambition.

For the world's dominant powers, it is a strategic obsession.

Today, that obsession has expanded dramatically.

Advanced chips power artificial intelligence, military systems, financial infrastructure and scientific research. The machinery required to manufacture them has become so sophisticated that relatively few companies control crucial links in the global supply chain.

The Netherlands, through ASML's lithography technology, occupies one such position.

China's influence over rare-earth processing provides another.

The world has created an extraordinary system of mutual dependence, only to discover that its most powerful participants increasingly regard dependence itself as a threat.

This is where Zairil's argument becomes especially compelling.

In 1972, Intel established its first offshore assembly and testing facility in Penang.

Over the following five decades, that modest beginning developed into one of Asia's most sophisticated semiconductor manufacturing ecosystems.

Malaysia today commands approximately 13% of the global market for semiconductor assembly, testing and packaging.

But Zairil's important observation concerns the composition of Penang's industrial landscape.

American, European and Chinese technological interests coexist within the same manufacturing environment.

Intel, Bosch and other Western technology companies operate alongside businesses connected to Chinese capital.

The relationship between American chip designer AMD and China's Tongfu Microelectronics is particularly revealing, demonstrating how competing national technological interests can coexist within a shared corporate and manufacturing structure.

According to the increasingly suspicious logic governing Washington and Beijing, such arrangements ought to be intolerable.

Yet they continue to function.

Zairil draws on the international relations concept of strategic hedging to explain this apparent contradiction.

Smaller countries preserve their autonomy by maintaining relationships with competing powers rather than becoming dependent on one.

But his argument goes beyond diplomatic neutrality.

Neutrality, he suggests, is not particularly valuable unless it is supported by something the great powers actually need.

Penang possesses five decades of accumulated engineering expertise, entrenched supplier relationships, specialised infrastructure and institutional knowledge.

Those capabilities cannot simply be transferred elsewhere whenever an American president announces another tariff or Beijing decides to retaliate.

Penang's strategic advantage is not that Washington and Beijing have suddenly become friends.

It is that both have compelling economic reasons to remain involved.

That is a far more sophisticated form of leverage than merely declaring oneself neutral.

Consider the United Arab Emirates.

Abu Dhabi has invested heavily in becoming a global artificial-intelligence centre while maintaining relationships with both American and Chinese technology companies.

Washington, however, viewed some of those Chinese connections with considerable suspicion.

In 2024, Microsoft's US$1.5 billion investment in Emirati artificial-intelligence company G42 followed the company's decision to distance itself from Chinese technology interests, including Huawei equipment.

Access to advanced American technology came with significant security commitments.

The message was unmistakable: financial wealth does not automatically confer technological independence.

Taiwan offers another instructive example.

Its semiconductor industry, particularly TSMC, is so important to global manufacturing that analysts speak of a silicon shield — the proposition that Taiwan's indispensability could discourage military aggression.

Whether economic interdependence can ultimately deter strategic ambition remains uncertain.

But these examples illuminate the distinction at the heart of Zairil's analysis.

A country may possess enormous financial resources and still remain technologically dependent.

Another may possess relatively modest geopolitical power but develop capabilities that the world's largest economies cannot easily replace.

Penang has spent half a century moving towards the second category.

There is, however, a crucial warning embedded in Zairil's paper.

Malaysia's semiconductor strengths remain concentrated in assembly, testing and packaging.

At the technological frontier — advanced fabrication, chip design tools and the most sophisticated manufacturing processes — the country remains considerably less influential.

This distinction should fundamentally change how Malaysians evaluate economic success.

Attracting foreign investment is not the same as acquiring technological power.

A billion-dollar factory is impressive. But who owns the intellectual property? Who controls the machinery? Who develops the essential technology? And who makes the decisions when geopolitical tensions intensify?

These are questions far more consequential than the number of investment announcements appearing in government press releases.

Zairil deserves recognition for moving the discussion beyond the familiar political celebration of foreign capital.

His paper connects industrial infrastructure, engineering talent and accumulated manufacturing expertise to the larger question of national strategic autonomy.

It is an ambitious argument, and one that deserves attention well beyond Penang.

It also raises a challenge.

If Malaysia wishes to preserve its position, it cannot remain content with yesterday's capabilities. The same industrial ecosystem that makes Penang valuable today must continuously evolve towards higher-value technological activities.

Otherwise, indispensability risks becoming merely temporary convenience.

The Nvidia controversy will eventually reach its conclusion. Investigators will determine what they can substantiate, reputations will be reassessed, and the world will find another scandal to occupy its attention.

But the struggle for technological supremacy will continue.

Washington will seek to preserve its advantages. Beijing will invest in overcoming its vulnerabilities. Both will increasingly regard semiconductor technology as inseparable from national power.

And smaller countries will continue navigating the dangerous space between them.

What makes Zairil's Beijing presentation particularly significant is that it refuses to treat smaller nations as helpless spectators in this confrontation.

He recognises that Malaysia cannot compete with American financial resources or Chinese industrial scale.

But it can develop capabilities that make excluding it economically unattractive.

There is an important lesson here for Malaysian policymakers.

Our independence will not be secured through declarations of neutrality, diplomatic niceties or congratulatory speeches following another multinational investment.

It will be secured through knowledge, engineering excellence, technological ownership and institutions that make Malaysia increasingly difficult to replace.

Zairil went to Beijing and articulated something that deserves to resonate equally in Washington, Putrajaya and every Malaysian boardroom.

The great powers are increasingly obsessed with making one another technologically dispensable.

Malaysia's smartest response may be to make itself indispensable to both.

That is not sitting on the fence.

That is having the foresight to build a fence so valuable that neither neighbour can afford to tear it down.

Abbi Kanthasamy is a Canadian entrepreneur, photographer and writer.