Jensen Huang Steps Down as Nvidia Chief Amid Personal Ties Scandal

What happened

On November 12, Nvidia's board of directors announced the immediate departure of Jensen Huang from the positions of president, chief executive officer, and board member. Kun.uz reported this, citing a company statement. Until a permanent successor is appointed, the duties of CEO are being performed by Chief Financial Officer Colette Kress, who retains her current roles of executive vice president and CFO. The board has begun a search for a permanent leader and is considering both internal and external candidates.

Who is temporarily leading the company

Colette Kress has been Nvidia's chief financial officer since 2013 and has 25 years of experience at technology companies, including Cisco and Microsoft. Harvey Jones, the former CEO and executive chairman of Synopsys, has been appointed chairman of the board (a position that previously did not exist). According to Bloomberg, which the outlet cites, possible external candidates include leading specialists from Apple, Amazon, and Google, as well as executives from Micron, Arm, and AMD; according to sources, Elon Musk had invited Huang to join him.

The scandal that preceded the resignation

In late October, The New York Times reported that US intelligence agencies suspect businesswoman Alice Huang, who was considered close to Nvidia's chief, of working for Chinese intelligence. It then became known about her long romantic relationship with Jensen Huang; he admitted infidelity to his wife and apologized to employees, and the company launched an investigation — at that time, the board of directors still expressed confidence in the CEO. According to the outlets, Alice Huang is about 42 years old, and in 2023 she became head of the Singapore-based Megaspeed, which was a buyer of Nvidia chips; her husband, entrepreneur Kan Wei, who had known Nvidia's chief for many years, reportedly introduced her to Huang. Later, the NYT described another story: five former and current employees claimed Huang had an affair with company vice president Kimberly Powell, who quickly rose from an ordinary employee to head of the healthcare division. Reuters, citing sources, added that there is a third company employee who had a relationship with Huang; her name is not disclosed, and Nvidia declined to comment. Nvidia's code of conduct requires all employees to avoid conflicts of interest related to personal relationships.

Market reaction

After the news of the resignation, Nvidia shares fell 13% at the opening of trading. The company, valued at $4.5 trillion, has lost, according to the outlet's calculations, about $600 billion in market capitalization since the scandal began. Analysts at Yorkville Ives had predicted even before the resignation a loss of a quarter of its value: they valued the stock at $300 if Huang remained in office and at $225 after his departure. The decline also affected Nvidia's clients: Alibaba, which rented computing power through Megaspeed, which is linked to Alice Huang, lost 7.1% on the Hong Kong exchange, while shares of competitors AMD and Broadcom rose more than 3% in over-the-counter trading, and Alphabet gained 0.2%.

The political dimension

Three Republican chairmen of House of Representatives committees — Brian Mast, John Moolenaar and Rick Crawford — requested a closed briefing with Huang on November 18 regarding his relationship with Alice Huang and the company's anti-espionage measures. Moolenaar warned that if Huang refuses or evades the date, a subpoena compelling him to appear before Congress would be issued. When the board of directors announced the start of the review, it stated that it saw no grounds to believe national secrets or corporate secrets had been disclosed, but the situation has changed since then. According to Reuters, Huang was a frequent guest at the White House and recently attended a dinner in honor of the visit of PRC Chairman Xi Jinping; The Guardian reports that since the start of Trump's second presidential term they have met at least seven times, and they have each other's personal phone numbers. Senator Tim Scott sent letters to Huang and Commerce Secretary Howard Lutnick inviting them to testify before the banking committee, noting that the recent news raises serious national security concerns. According to The Wall Street Journal, some presidential advisers blame Lutnick specifically for the political conflict around Nvidia — because of his attempts to obstruct export restrictions on AI chips for Southeast Asian countries and his long-standing ties with Huang.

Context

Huang founded Nvidia in 1993 together with Chris Malachowsky and Curtis Priem and has led the company ever since; he owns 3.61% of the shares — the fourth-largest stake. Nvidia's charter allowed the removal of a director by a majority decision of the board, both with and without stated reasons; on the 11-member board, everyone except Huang was an independent director. The company remains one of the largest manufacturers of graphics processors and a key supplier of chips for artificial intelligence systems. It is unknown who will become the company's permanent head and how the review and the proceedings in Congress will conclude.