Jensen Huang has abruptly resigned as chief executive of Nvidia, the AI chipmaking giant, following allegations of extramarital affairs that have sent shockwaves through Silicon Valley and Washington, D.C. The company, which has been one of the world's most valuable due to the AI boom, has seen $550 billion wiped off its market value in just five days as the scandal dominated headlines.
Interim CEO Takes Charge
Nvidia's interim CEO, Colette Kress, called an emergency meeting of her executive team to discuss the company's future. Huang's alleged conduct has not only raised questions about professional boundaries but also made Nvidia the target of scrutiny from U.S. lawmakers concerned about national security risks.
Huang, who has been the public face of Nvidia since 1993, admitted on Sunday to being "unfaithful" to his wife after reports emerged that he had an extramarital affair with a suspected Chinese spy, Alice Huang (no relation). On Wednesday, further reports alleged a second relationship, this time with an Nvidia executive.
Alice Huang worked as an executive at the Singaporean firm Megaspeed and has been suspected of being an intelligence asset for China, according to The New York Times. China has rejected those allegations as a smear. U.S. Attorney General Todd Blanche said on Thursday that the Department of Justice had not yet drawn any conclusions about whether Alice Huang was engaged in espionage for Beijing.
Congressional Pressure Mounts
Senators Elizabeth Warren and Chris Coons, along with other Democrats on the House Foreign Affairs Committee, have publicly demanded that Huang brief Congress on his alleged affair. If he refuses to appear voluntarily before any committee that calls him, he could be subpoenaed, one Senate staff member told the BBC.
Representatives of Nvidia have repeatedly declined to comment since Wednesday. A personal representative of Huang also declined to comment on Thursday.
According to U.S. media, Huang's alleged second affair was with a long-time Nvidia executive, Kimberly Powell, who reported directly to him within the company. Sources have told the BBC that Nvidia employees had noticed the pair were unusually close.
Employees React
Huang had been widely expected to weather the scandal after the first affair became public, even as Nvidia announced it had launched an investigation into whether its CEO had been "the target of a foreign intelligence effort." One current Nvidia staff member told the BBC that the initial reports of his infidelity were more or less brushed off by rank-and-file workers inside the company. It wasn't until Huang's alleged affair with the Nvidia executive became public that workers started to feel "this is crazy," the person said.
Another Nvidia employee said they had been told not to speak with the press or otherwise comment on the situation in public. Many staff have earned millions of dollars in compensation through their ability to cash out their Nvidia shares as the stock soared.
Nvidia has said it has "no reason to believe that either national security or Nvidia secrets were compromised," but pledged that its independent inquiry would look at all available information.
From Gaming Chips to AI Powerhouse
The company's meteoric rise had been led by Jensen Huang, who became a major booster of the AI industry, which relies on Nvidia for the powerful computer chips it manufactures. Initially those chips were designed for computer gaming. But as AI technology evolved in the last four years into chatbots and large language models, companies building AI tools suddenly required huge numbers of Nvidia computer chips that could process large amounts of data.
Nvidia is now hunting a permanent replacement for Huang. Chief Financial Officer Colette Kress was named on Thursday as interim CEO.
Several tech insiders that the BBC spoke with this week noted that Huang's downfall has been a major topic of conversation in Bay Area circles, an area that is filled with tech employees, industry executives and billionaires. "Obviously, his behaviour has compounded over time," one long-time tech industry executive said, noting that other executives had experienced public issues of infidelity that could have been avoided. Bill Gates of Microsoft and Jeff Bezos of Amazon had affairs exposed in the last decade. Both men are now divorced from their wives.
Huang has been married to Lori Huang for 40 years. Both of their children are also executives at Nvidia. The tech executive added that the overall feeling among people discussing Huang's affairs was that "stuff will keep coming out."
Market Fallout
Nvidia's stock fall this week is the most significant five-day drop the company has seen since going public 27 years ago. The company's market value rose by more than 470% in the past five years, with its stock peaking just a few weeks ago. It is now down by 31% against a backdrop of wider uncertainty in the tech sector.
Because of Nvidia's size and success in recent years, such a drop can have a direct impact on the savings accounts of ordinary Americans. Nvidia's value makes up about 7% of the S&P 500 index, for instance. That index is offered as a popular index fund in 401ks, which are retirement savings accounts. Those account balances rise and fall with the changes of the stock market.
