“The Nvidia Board is initiating an independent investigation in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort,” the company’s board said in a statement on Sunday. A committee of independent directors, assisted by outside independent counsel, will oversee the review.
The New York Times reported last month that Huang had a relationship with Alice Huang, an unrelated former executive at Singapore-based data centre firm and Nvidia customer Megaspeed, whom US authorities had concluded was a Chinese intelligence asset, according to the Kathmandu Post. Megaspeed had already drawn scrutiny in Washington, with Commerce Department officials investigating whether it helped Chinese firms sidestep US export restrictions on AI chips, according to New York Times reporting cited by TipRanks. On Sunday, Huang admitted to the affair in an email to employees.
“While the Board has no reason to believe that either national security or Nvidia secrets were compromised, the Board’s inquiry will examine all available information,” the board’s statement added. The board said it has confidence in Huang and his leadership team, and an Nvidia spokesperson told CNBC that Huang remains committed to leading the company as chief executive without interruption.
“I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry,” Huang wrote in the email, which Nvidia published on its newsroom the same day.
“Regarding the national security concerns raised in news reports, Nvidia’s Board of Directors has initiated an independent investigation. I support the investigation and will cooperate fully,” he wrote. “I am committed to protecting Nvidia and supporting America’s national security.” Huang also asked that his family be given privacy.
“Groundless speculation and purely aimed at smearing and slandering China,” is how Chinese foreign ministry spokesperson Guo Jiakun described the report at a media briefing in Beijing, according to the South China Morning Post. TweakTown noted that the claims, based on unnamed sources, remain unconfirmed.
Megaspeed has appointed external legal advisers to run an internal investigation and has told the US government it is willing to cooperate, Business Chief reported. Nvidia has previously said customers such as Megaspeed receive no information relevant to national security, and that earlier claims the firm was smuggling chips into China were investigated and dismissed last year. Huang said in an interview that his interactions with the executive were typical of those with Chinese customers, according to Deccan Chronicle.
“There is clearly risk that Jensen could be removed as CEO,” said Dan Ives of Yorkville Ives & Co, speaking to CNBC, adding that the stakes for the share price are high given how central Huang is to Nvidia’s global strategy. Shares fell about 5% in premarket trading on Monday, CNBC reported, while Bloomberg put early declines at about 6%. Bloomberg also noted that shares in Nvidia’s Asian suppliers were largely unaffected.
The stock had fallen about 3% on Friday, according to Business Chief, and was already trading 22% below its record before the announcement, according to 24/7 Wall St, which put Nvidia’s market value at $4.51 trillion. Analysts cited by the Kathmandu Post said a prolonged review could delay investment decisions or product launches, with wider implications for the semiconductor industry. CBC noted the inquiry comes as investors are already pulling back over questions about the sustainability of the AI market.
Republican lawmakers in the US House of Representatives have called on Huang to testify before Congress on 18 November, Al Jazeera reported. Al Jazeera also reported that Beijing has denied any spy plot targeting Huang.
Nvidia announced a collaboration with Rebellions and SK Telecom on sovereign AI infrastructure on the same day as the board statement, and has scheduled a conference call for its third-quarter results. How the board’s inquiry concludes, and how quickly, will shape whether the episode remains a governance question for one company or becomes a wider test of how boards worldwide manage founder-led firms sitting at the centre of geopolitical supply chains.
