3 minBusiness
Nvidia Board Weighs Replacing CEO Jensen Huang Amid Scandal
Nvidia's board is reportedly considering replacing CEO Jensen Huang after the New York Times made public a second extramarital relationship involving the executive. The chipmaker's shares fell sharply after hours.
Nvidia's board of directors is reportedly preparing to replace CEO Jensen Huang. The New York Times reported that Huang had a second extramarital relationship, this time with Kimberly Powell, the company's vice president for healthcare, who reports directly to him. The board could meet soon to decide on Huang's future at the helm of the company.
Huang acknowledged an affair with a woman named Alice Huang on November 8. That relationship is not related to the connection with Powell. Alice Huang is an executive at the Singapore-based company Megaspeed International. According to the Times, U.S. officials believe she could be an agent of China's Ministry of State Security (MSS).
The news weighed on the share price. Nvidia stock lost nearly eight percent in after-hours trading, after closing at around $173.73. According to the reporting, the company has lost more than $450 billion in market value since November 8. With a market capitalization of about $4.1 trillion, Nvidia remains second behind Apple among the most valuable U.S. companies.
According to Bloomberg, Nvidia is working with an external firm on possible successors for the chief executive role. The board is also examining whether Huang was a target of foreign intelligence services. The board said there is no evidence that Nvidia's national security or trade secrets were compromised.
Megaspeed is also at the center of the investigation. According to the reporting, the company allegedly moved at least $7.5 billion worth of Nvidia chips to China. Its Malaysian subsidiary Speedmatrix reportedly received more than 200 restricted shipments. The chips were reportedly deployed in data centers of the Shanghai-based company Century Litong, in which a younger sister of Alice Huang is reportedly a founding shareholder.
Singapore is investigating Megaspeed over alleged violations of domestic law. The government, however, rejected reports that it was examining Alice Huang for espionage. U.S. authorities are also reviewing the company for possible export control violations. Megaspeed and Nvidia deny wrongdoing, or state that no illegal transfers have been identified, respectively.
For investors and industry observers, the key question is how far the affair could spread to the company and the entire industry. Estimates suggest Nvidia's direct share of a typical 401(k) retirement account is about three to five percent, while public pension funds hold roughly 2.5 percent, according to estimates. The main risk is therefore seen as spillover to AI companies and customers of the chips. At the same time, analysts expect the company's long-term value to depend more on its business than on the affair.
Source: nbcnews.com
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