Nvidia chief executive Jensen Huang has stepped down after reports that he had two extramarital affairs, one of them with a businesswoman US authorities suspect of spying for China, Reuters reported on Thursday.
Chief financial officer Colette Kress will take over as interim chief executive while Nvidia looks for a permanent successor, considering both internal and external candidates, the company said. Huang, who co-founded the chipmaker and is its fourth-largest shareholder with a stake of about 3.61 per cent, will also leave the board. Nvidia named Harvey Jones, a board member and former chief executive of Synopsys, as its first board chair.
Nvidia’s shares fell more than 12 per cent in early trading, putting the world’s most valuable company on course to lose about 500 billion dollars in market value and pulling the wider market lower. Shares in rivals AMD and Broadcom rose 2 per cent and 5 per cent respectively.
In a memo to employees, Kress said the board, executive staff and she recognised “this has been an extraordinarily difficult period”. She said the company would hold a meeting on 18 November at 9am Pacific Time.
Mounting pressure
Pressure on the 63-year-old, who is married, had been building in recent days after reports that he had an affair with Alice Huang, a former executive at Singapore-based cloud company Megaspeed. Reuters said US authorities have concluded she was a Chinese intelligence asset. Beijing has denied she is a spy. The two, who are not related, have been photographed together in Taiwan, Singapore and California.
According to media reports, Washington has also investigated Megaspeed, an official Nvidia cloud partner with priority access to its chips, over suspicions it helped China obtain advanced AI chips restricted under US export controls.
Earlier this month, Nvidia’s board launched an inquiry, led by independent directors with outside legal counsel, into whether Huang had been targeted by a foreign intelligence operation. At the time, it expressed confidence in him.
The controversy escalated on Wednesday, when the New York Times reported that Huang had also had an affair with Kimberly Powell, Nvidia’s vice president of healthcare, who reported to him. The board met that day to consider removing him, a person familiar with the matter told Reuters.
Impact on AI industry
Huang’s departure threatens to disrupt an AI industry he helped finance by investing Nvidia’s growing cash reserves in cloud providers, suppliers and the sector’s biggest laboratories, Reuters said.
Michael Feldman, portfolio manager at ClearBridge Investments, said the risk was not to Nvidia’s technology plans, which are largely visible for several years, but to execution. “Jensen has been the chief conductor of an extraordinarily complex system,” he said, adding that in a world of real bottlenecks, such coordination was a competitive advantage in itself.
Investor sentiment towards AI stocks was already fragile, with soaring cash burn and rising debt at technology giants that have traditionally been cash-rich fuelling doubts over whether the AI boom will pay off.
Export policy
The departure could also have far-reaching consequences for US chip export policy, given Huang’s efforts to preserve access to the Chinese market and his close ties with US President Donald Trump, Reuters said.
Trump said on Sunday that Huang had “done an amazing job for our country”, and that Huang had told him he had no idea the Chinese woman he had an affair with was a spy. On Thursday, Trump said on social media that former Apple chief executive Tim Cook should take over at Nvidia, describing him as the only man to replace Huang.
US House Speaker Mike Johnson said it was critically important that the right successor be chosen, noting a growing consensus in Congress on limiting exports of semiconductor chips to China.
Background
For years, Nvidia was best known to gamers seeking high-end graphics. But its chips’ ability to perform many calculations at once made them central to the AI boom and a strategic prize in the race between the United States and China to dominate the technology, and turned Nvidia into the world’s most valuable company.
That made Huang a celebrity chief executive, mobbed by fans in Taiwan and South Korea asking him to sign books, posters and sometimes their bodies. Shares moved at his mere mention of company names at events.
(Reuters)
