Hundreds of billions of dollars have been wiped off the value of Nvidia after the US chipmaker announced an independent investigation would be carried out into its chief executive’s affair with an alleged Chinese spy.
The tech firm saw its shares fall by about 4% by close of trade on Monday after Jensen Huang admitted having an extramarital affair.
Nvidia’s probe came after reports that the US believed China had targeted the Nvidia boss in an espionage campaign.
However, China has rejected the claims, with its foreign ministry saying allegations about Chinese spies were “entirely groundless, speculative and intended to smear and malign China”.
Nvidia said it had no reason to believe the company’s secrets or national security were compromised, but a statement by the firm’s board of directors said it would begin an investigation in “light of recent reporting that founder and chief executive Jensen Huang has been the target of a foreign intelligence effort”.
US intelligence officials believe Alice Huang, also known as Huang Le, was a spy for Beijing, according to a New York Times report.
The report said Secretary of State Marco Rubio sent a memo to top officials in Washington last spring warning that the Nvidia boss was in a close relationship with a Chinese spy.
Alice Huang was managing director of Singaporean company Megaspeed, which has had dealings with Nvidia.
Jensen Huang admitted he was “unfaithful” to his wife and apologised for hurting her and their children. He added he was “committed to protecting Nvidia and supporting America’s national security” and would cooperate with the investigation.
The Nvidia co-founder has also been requested to appear for a joint closed-door briefing for several Congressional committees next week.
Members of the US House Foreign Affairs Committee asked Jensen Huang to appear for a closed-door briefing last week on his interactions with Alice Huang and Nvidia’s security protocols around espionage.
“Recent reports raise significant national security concerns regarding the PRC’s [China’s] access to sensitive US technology and information,” congressmen Brian Mast, John Moolenaar, and Rick Crawford wrote in a letter.
“It is vital that Congress determines the extent to which US national security has been placed at risk.”
After Nvidia announced its investigation, other big tech bosses, including Elon Musk, came out in support of Jensen Huang continuing to lead the firm.
US President Donald Trump said the Nvidia boss was an “honourable guy”.
However, the news sparked a sell-off in Nvidia’s shares, with about $250bn (£190bn) wiped of the company’s market value.
While Nvidia shares fell, the US stock market opened the week on a positive note after last week’s turmoil, with Nvidia’s rival chipmakers benefiting.
But analysts suggested the hit would be short-lived. Victoria Fernandez, chief market strategist at Crossmark Global Investments said investors would not abandon Nvidia, because the chipmaker was so important to the AI industry.
“Nvidia is the core of this AI trade, and without them, all these other pieces start to fall apart because the financing’s not there,” she told the BBC.
Jensen Huang co-founded Nvidia with two other engineers in 1993, and the company is central to making the hardware for emerging AI technologies.
Its chips were initially designed for gaming, but he shifted its focus to AI development, turning it into the world’s second-most valuable company.
Huang’s position vulnerable unlike other tech bosses
A key concern for investors going forward is what would happen to Nvidia if Jensen Huang was removed from the company, as Fernandez said there was “no natural successor” to the chief executive.
Unlike other tech founders, Jensen Huang is vulnerable to any move by Nvidia’s board of directors to oust him.
He owns only around 3.5% of the company, and Nvidia operates on a single-class voting structure, meaning his stake would not be enough to act as a veto power over any board decision.
By contrast, many tech founders who lead their companies, including Mark Zuckerberg of Meta and Musk of Tesla and SpaceX, hold significant percentages of multiple types of stock in their companies.
Fernandez said she does not believe the board will remove Jensen Huang as chief executive, unless there is glaring evidence of wrongdoing related to national security or intellectual property, “but I bet they start bringing someone up as his number two, to have there for the future.”
The modest fall in its shares mean investors believe it is unlikely he will step down or be removed as chief executive, but that the outcome of the investigation will be closely watched.
Even people who do not directly own shares in Nvidia can be affected by rises and falls in its value. Pensions or savings invested in pots which have stakes in the company through index tracking funds can be impacted
Nvidia chips have been a major focus of the AI race between the US and China and the White House has previously imposed controls on where its advanced products can be sold.
Washington previously restricted the H200, Nvidia’s second most advanced semiconductor, over concerns that it would give China’s technology industry an edge over the US.
But Jensen Huang has opposed restrictions on selling Nvidia’s chips to China, arguing that the global rollout of AI would be better powered by US technology.
In January, the Trump administration said it would allow the company to sell its H200 chips to Chinese customers under certain conditions.
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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
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