New York: Engulfed by scandals, Jensen Huang, the CEO of Nvidia, whose chips are a driving force in the AI revolution, is facing ouster by the company’s board, a development with far-reaching consequences for the US economy and its technological leadership.
The board was meeting Wednesday evening (local time in the US) to decide on the fate of Huang, who has admitted to an affair with a woman who is suspected of being a spy for China, and was reported to be involved with another woman working for him, according to several independent news reports.
In what could be a classic honeypot spy trap involving Alice Le Huang (not related to him despite the shared surname), the scandal reaches into the highest levels of technology, business and government.
The upheaval comes as President Donald Trump prepares to go to China for the Asia Pacific Economic Cooperation summit next week, where he will meet with President Xi Jinping.
China has denied any intelligence links to Alice Huang.
Huang was closely associated with President Donald Trump, who loosened the ban on selling high-end chips to China by allowing him to sell a second-level chip to Beijing with a cut for the government.
Huang had lobbied for selling advanced chips to China, opposing the US ban to keep China from catching up with it in the AI race.
Trump gave him a clean chit Monday, telling reporters, “I just know Jensen very well; I just think he’s a very honourable man.”
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The scandal comes on the heels of the Republican Party rout in the midterm elections, and the party itself has called Huang for a closed-door briefing with the House of Representatives Foreign Affairs Committee and threatened him with a subpoena if he does not come.
When the Democrats take over Congress next year, he and his links in the US and abroad will come in for greater scrutiny.
Huang built Nvidia from a chipmaker for gaming computers to the lynchpin of the AI revolution, powering virtually all major Western AI companies and helping keep the US lead in the domain.
The danger to US AI dominance is that Huang kept an iron-fisted control over the company without a hierarchy or an obvious successor to him, and that could cloud the company’s future.
About 60 department heads reported directly to him, and a successor would have to not only wield the same level of control but also be knowledgeable enough and capable of continuing the company’s pioneering work.
The company stock fell from its peak of $243.37 October 6 to $158.78 in after-hours trading Wednesday, a decline of nearly 35 per cent, and acting as a drag on many indexes.
Nvidia was the richest US company by value but, as the scandal unravelled, conceded that position to Apple, while Huang slipped from the sixth position on the Forbes billionaire ranking to 12th with a net worth of about $148 billion Wednesday.
A succession crisis would have an economic impact across the AI sector because of the reliance on Nvidia chips, and beyond.
The AI sector has been an important driver of the stock market boom.
Anthropic, one of the giants of AI that rides on Nvidia chips and is preparing to go public, has valued itself at as much as $1.46 trillion.
Any disruption could have wider repercussions that reach into the retirement funds of millions in the US.
Even if China had not received any trade secrets through Alice Huang, it could still benefit from any upheaval in the US AI sector due to the fallout of the scandal.
The New York Times reported Wednesday (local time) Huang’s alleged affair with a company executive, Kimberly Powell, who is the vice president of health care, in violation of the company code of conduct, adding to his travails.
Huang, 68, is married for 41 years to Lori Huang, whom he met while they were engineering students, and made a public apology to her for the affair with the Chinese woman.
Besides the possibility of company secrets, that affair drew scrutiny because of fears that Alice Huang had diverted advanced chips to China.
She was an executive with a Singapore-based company, Megaspeed, that the Times reported was a shell outfit used to buy the advanced chips and divert them to China or use them through Southeast Asia companies.
She had worked as a TV reporter before getting into banking on her way to entrepreneurship with Megaspeed.
Media reports said that several months ago US intelligence agencies had raised suspicions about her links to China’s Ministry of State Security, and Secretary of State Marco Rubio had warned Trump about it.
Trump has asserted that he did not receive it.
Huang was not on the list of US business leaders to accompany Trump to China during his May visit, perhaps because of the doubts about him,
But Trump, who learned about it after the trip had started, arranged for Huang to meet Air Force One during a refuelling stop in Alaska and join him on board.