The key facts

  • Nvidia's board of directors created a committee of independent directors with external lawyers to investigate reports of Huang's ties to a woman suspected of working for Chinese intelligence.
  • Shares fell 6.4% to $174.7; Beijing called the allegations unsubstantiated slander.
  • The board said it sees no signs of a leak of state secrets or company secrets, and expressed confidence in Huang.

The board of directors launched an investigation, and shares fell by more than 6%

Nvidia's board of directors announced on Sunday the launch of an “independent investigation” after reports that the company's founder and CEO Jensen Huang may have been targeted by a foreign intelligence service. The investigation will be conducted by a committee of independent directors with the support of external independent lawyers, according to the company's statement. According to Anadolu, Nvidia shares fell by 6.4% to $174.7 on Monday; Euronews noted a decline of 4.51% before the opening of trading in the US.

The essence of the allegations and the parties' positions

As reported by The New York Times and Financial Times, cited by Anadolu, the matter concerns Huang's personal relationship with Alice Huang, the head of the cloud company MegaSpeed, whom US officials, according to the publications, suspect of passing information to Beijing. The CEO himself, according to the company's statement, supports the review and has pledged to cooperate. The board of directors emphasized that it “has no reason to believe” that US national security or Nvidia's secrets were compromised, but will examine all available information, and expressed confidence in Huang and his team.

China's and the market's reaction

On Monday, China rejected the allegations: Foreign Ministry spokesperson Guo Jiakun, at a regular briefing in Beijing, called the reports of a Chinese spy operation baseless speculation and a campaign to smear Beijing. Markets and analysts are reacting with existing restrictions on US technology exports to China in mind. AJ Bell's head of markets, Dan Coatsworth, commented to Euronews that Huang's position is “the most risky” and suggested he could temporarily step aside during the review, or, in the worst-case scenario, resign; at the same time, he noted that the board may be interested in keeping Huang as the architect of Nvidia's success in AI chips. The company, whose chips underpin a significant portion of the infrastructure for developing and launching AI models, is due to publish its third-quarter report on November 17.