Nvidia's board met late Wednesday to decide whether to oust CEO Jensen Huang, a source familiar with the matter told Reuters, after the New York Times reported that Huang had a separate extramarital affair with a company executive who reported to him, deepening a crisis that has already wiped about $600bn from the chipmaker's market value this week.
The board's meeting, confirmed by a source to Reuters, marks a sharp escalation from Sunday, when the board expressed confidence in Huang. Nvidia said Tuesday that he would continue to lead the company without interruption. Nvidia has appointed Wachtell, Lipton, Rosen & Katz to conduct what it called a thorough and independent investigation into Huang's relationship with Alice Huang, a woman US intelligence has said was involved in facilitating shipments of Nvidia chips to Chinese firms. The New York Times reported the second affair involved Kimberly Powell, Nvidia's president of healthcare, who was reportedly captured on video being affectionate with Huang at a hotel during a company conference in March.
Huang, 63, co-founded Nvidia in 1993 and has led it since. He owns about 3.6% of the stock and has dozens of direct reports, underscoring the tight control he maintains. The company's shares slid about 8% in after-hours trading after the Wall Street Journal first reported that Nvidia was preparing to oust Huang. Including Wednesday's after-hours selloff, Nvidia has lost about $600bn in stock market value this week since the board announced its investigation. Asian markets fell sharply: Japan's Nikkei lost 0.7%, Hong Kong's Hang Seng 1.3%, South Korea's Kospi nearly 0.6% and Taiwan's benchmark 2.6%.
In a memo to employees on Sunday, Huang acknowledged being unfaithful to his wife and took full responsibility, but gave no details about the relationship. The crisis began with reports that Huang had an affair with Alice Huang, a former executive at Singapore-based Megaspeed whom US intelligence suspects of spying for China. Beijing has rejected the spying allegations. Chinese domestic GPU makers surged Thursday on expectations that Nvidia's troubles could help local suppliers win market share.
Republican lawmaker John Moolenaar, chair of the House select committee on the Chinese Communist party, told Fox Business that there will likely be subpoenas for Huang to appear on Capitol Hill if he does not respond by day's end to a request to meet with lawmakers. Democratic Senators Elizabeth Warren and Chris Coons have asked the Trump administration to preserve all documents tied to Nvidia's chip exports to China or Huang's affair with an alleged Chinese intelligence asset, the Wall Street Journal reported.
Potential successors being discussed, according to Agence France-Presse, include CFO Colette Kress, data centre executive Ian Buck, vice-president of applied deep learning research Bryan Catanzano, Huang's daughter Madison Huang (senior director of product marketing), his son Spencer Huang (director of product management in robotics), his cousin Lisa Su (CEO of AMD), Arm CEO Rene Haas, and former Apple CEO Tim Cook. Analysts said the board faces a difficult decision with no succession plan in place.
Analysis
Why This Matters
- Nvidia is the dominant supplier of AI chips, and its CEO's potential ouster injects uncertainty into the global AI supply chain and tech stock valuations.
- The scandal involves US-China technology rivalry and national security concerns over alleged Chinese intelligence operations targeting a key executive.
- Investors and lawmakers are focused on whether Nvidia's chip export controls were compromised and what a leadership change means for US chip policy toward China.
Background
Jensen Huang co-founded Nvidia in 1993 with two other engineers, building it into a $4tn company whose graphics processing units (GPUs) became essential for artificial intelligence. He has been CEO since inception, maintaining tight control with 60 direct reports. The crisis began last week when reports emerged that he had an affair with Alice Huang, a businesswoman US intelligence believes was facilitating chip shipments to China. Huang admitted the affair Sunday. A second affair with a company executive was reported Wednesday. The board initially expressed confidence in Huang but has now shifted to considering his removal.
Key Perspectives
Chris Beauchamp (IG chief market analyst): "One of the most impressive careers is set to end. Huang might have been able somehow to cling on at Nvidia after one revelation... but after two, one of which involving a direct report, his fate is sealed."
Jake Dollarhide (Longbow Asset Management CEO): "It looks bad from every single angle. I believe the board won't oust him until they have an all-star, a known entity in the tech sector, to replace him."
Elon Musk (SpaceX and Tesla CEO): Said it would be an honour to hire Huang, and indicated agreement with a suggestion that the board should wait for investigation results before ousting him.
Armina Rosenberg (Minotaur Capital portfolio manager): "Losing Jensen would be a real blow." She said CFO Colette Kress would be the natural interim choice, but the question is who leads long term.
What to Watch
- The board's decision on whether to oust Huang immediately or wait for the independent investigation to conclude.
- Whether US lawmakers issue subpoenas for Huang to testify before Congress later this month.
- Impact on Asian markets and Chinese domestic GPU makers as the crisis unfolds.
Checked
11 claims in this story checked against 5 sources: 4 supported.
Show each claim
- SupportedNvidia’s board met on Wednesday to decide whether to oust CEO Jensen Huang.World news | The Guardian: “Nvidia’s board of directors met on Wednesday to decide whether to oust Jensen Huang as CEO of the world’s most valuable chip company, according to multiple reports”
- SupportedThe New York Times reported a second extramarital affair involving an Nvidia executive who reported to Huang.Business | The Guardian: “Earlier in the day, the New York Times reported that Huang had also had an extramarital affair with a company executive who reported to him.”
- SupportedNvidia shares fell about 8% in after-hours trading.Business | The Guardian: “The company’s shares slid about 8% in after-hours trading after the Wall Street Journal first reported that Nvidia was preparing to oust Huang.”
- SupportedNvidia lost about $600bn in market value this week, including Wednesday’s after-hours selloff.Business | The Guardian: “Including Wednesday’s after-hours selloff, Nvidia has lost about $600bn in stock market value this week since the board announced its investigation into his relationship with a Chinese businesswoman.”
- Not in the sourcesThe Nikkei fell 0.7%, the Hang Seng 1.3%, the Kospi nearly 0.6% and Taiwan’s benchmark 2.6%.Business | The Guardian: “Nvidia shares plunge in extended trading, sending Asian markets lower”
- Partly supportedNvidia said on Tuesday that Huang would continue to lead the company without interruption.All Content from Business Insider: “On Sunday, the board told Business Insider that “Jensen is committed to continuing to lead Nvidia as CEO without interruption.””
- Not in the sourcesMoolenaar told Fox Business there would likely be subpoenas for Huang if he did not respond by day’s end to a request to meet lawmakers.
- Partly supportedWarren and Coons asked the Trump administration to preserve documents concerning Nvidia’s China chip exports and Huang’s relationship with the suspected Chinese operative, as the Wall Street Journal reported.Semafor: “Sens. Chris Coons, D-Del., and Elizabeth Warren, D-Mass., sent a letter to members of President Donald Trump’s Cabinet on Wednesday asking them to preserve documents related to Nvidia’s chip exports to China or entities that could divert such chips to the country.”
- Partly supportedAFP reported a potential-successor list including Colette Kress, Ian Buck, Bryan Catanzano, Madison and Spencer Huang, Lisa Su, Rene Haas and Tim Cook, with the stated roles for Huang’s children.All Content from Business Insider: “Analysts and former employees said there were several potential successors, including vice president Ian Buck and chief financial officer Colette Kress. Huang's two adult children, Madison and Spencer, also work at Nvidia.”
- Not in the sourcesChinese domestic GPU makers surged on Thursday amid expectations Nvidia’s troubles could help local suppliers gain market share.
- Partly supportedAnalysts said the board faces a difficult decision, with no succession plan in place.Just In: “But what is perhaps most extraordinary is that Nvidia has no obvious successor to Mr Huang”
