Nvidia CEO Jensen Huang confirmed an extramarital affair with executive Alice Huang on Sunday, as U.S. intelligence alleged she operated as a Chinese spy.
The disclosure erased $450 billion in market value over two days. Wachtell, Lipton, Rosen & Katz led an independent board investigation, as reported by The Guardian.
Nvidia Board Launches Inquiry
Nvidia’s board appointed the New York law firm to conduct a review of the relationship. The $4.1 trillion chipmaker hired the firm following reports that its chief executive had been involved with an alleged Chinese spy who also functioned as an Nvidia customer.
Nvidia’s board is overseeing the investigation, according to The Guardian. The company initially denied any improper relationship with the Chinese citizen—who bears no relation to the Nvidia boss—before Huang admitted on Sunday that he had been unfaithful to his wife. On that same day, Nvidia announced its formal investigation into reports that Huang had been the target of a foreign intelligence effort.
88% of surveyed $NVDA employees reportedly want Jensen Huang to remain CEO while just 1% want him removed. Would've been pretty wild if Nvidia employees turned on the guy who made half of them millionaires. pic.twitter.com/3uxDZLZfCI
Christian Lamarco of New York City-based Culper Research previously published a 40-page report in May detailing ties between the executives. The short-seller noted a close relationship between Jensen Huang and Alice Huang, also known as Huang Le, according to CBS News. Megaspeed and its Malaysian affiliate, Speedmatrix, bought $4.8 billion of Nvidia’s advanced AI equipment and processors over three years, while Alibaba provided billions to Megaspeed through shell companies.
Market Recovers After Drop
The chipmaker’s shares faced steep declines following the disclosures, affecting everyday retirement accounts invested in broad index funds, as reported by ABC News. Nvidia shares later staged a recovery, closing up 2.9% to $173.73.
NEW: We are short Nvidia $NVDA. We believe Nvidia has a significant China problem. Please see our full report and disclosures now available on our website, link in bio. pic.twitter.com/oTaJyL7S2R
“In a time of chip scarcity,” Brookings fellow Kyle Chan told The Verge said that would make it much harder for American companies to access them.
Tech analyst Dan Ives wrote in a note to investors that Jeffrey Sonnenfeld put Huang’s survival chances at about 50-50. Ives also posted on X that removing Jensen as CEO would make Nvidia worth 25% to 30% less as a company and stock.
NYT says Jensen Huang had a relationship Nvidia's vice president of health care. https://t.co/restNfM7wJ
Sonnenfeld said any other employee would be fired for such recklessness. He said Huang holds a unique status as co-founder and chief executive of the company he built over three decades.
China Rejects Espionage Claims
Alice Huang was alleged to be an asset of China’s Ministry of State Security, according to reporting outlined by Newsweek. She worked at HSBC’s Hong Kong private banking arm and at CITIC Securities, a Chinese investment bank, before her leadership role at Megaspeed.
China’s Foreign Ministry rejected the espionage claims. “The Chinese spy allegation is unsubstantiated,” ministry said.
President Donald Trump said Nvidia CEO Jensen Huang told him he had no idea his alleged affair partner was a Chinese spy, as reported by NBC Bay Area. Trump said on Sunday that he regards Huang as an honorable person who probably has an excuse for the situation, adding that the CEO is definitely suffering.
Useful summary of situation – scandal affecting political climate in Washington and adding momentum to legislation to tighten export controls but unlikely to infringe upon Trump’s near-term leader-level diplomacy with Xi. https://t.co/XBrKH2QuXy
U.S. Ambassador to China David Perdue said the situation is a reminder of the need for constant diligence, saying national security forms part of the economic effort. House Permanent Select Committee on Intelligence Chairman Rick Crawford wrote to Jensen Huang requesting closed-door testimony regarding his interactions with Alice Huang and Nvidia’s security protocols.
“cannot close the gap with US frontier capabilities,” Kilcrease, a senior fellow and director of the energy, economics, and security program at the Center for a New American Security (CNAS) think tank, told The Verge said.
Earlier coverage: GOP Lawmakers Weigh Probes Into Nvidia CEO Jensen Huang
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