Nvidia faces a reckoning
The downfall of Jensen Huang has plunged the chipmaker into crisis, raising questions about its corporate governance, China dealings and the future of an AI industry built around its founder.
On Tuesday, facing a mounting scandal about his affair with a suspected Chinese spy, Jensen Huang surprised his staff by summoning them to a planning session for his annual keynote presentation in Washington.
“It’s gonna be great . . . it’s going to be the best one ever,” the Nvidia chief executive told his team, according to multiple people familiar with the meeting.
It was a characteristically ebullient effort to project an air of “business as usual” for a chief executive battling to save himself, his family and what was until recently the world’s most valuable company. One colleague describes the experience as “surreal”.
But in private, facing the loss of his job and an ignominious exit from the company he co-founded 33 years ago, Huang had become a morose figure. He openly mused to colleagues that his relationship with his wife could now be more important than staying on as CEO, some of the people say.
By Thursday, Huang was out. He resigned shortly after reports of a second affair, this time with a subordinate, emerged. Allegations of another relationship with an employee followed soon after.
Two weeks of chaos at Nvidia ended with the downfall of one of the world’s richest and most powerful people, who had grown the company from a graphics chip specialist known mainly by hobbyists and gamers into a $5.8tn behemoth at its peak last month.
The scandal has plunged the chipmaker into crisis, reverberating through global markets as investors struggled to gauge the level of impact on Nvidia’s web of investments and circular financing deals that some estimate could top a trillion dollars.
Huang himself was the cornerstone of a company which underpins the entire AI economy, with its extraordinary dominance in the chips that help power the frontier labs and the wider ecosystem.
His influence spanned both industry and politics, as a happy warrior for unlimited advances in AI and a deeply connected cheerleader for relaxing controls on chip sales to China. He was courted by world leaders and tech executives, and cultivated a close relationship with President Donald Trump.
He operated with no fewer than 60 direct reports, giving him enormous influence over every decision made within the company — from minute decisions over chip design to which companies and countries those chips were sent to. No single person was capable of challenging him, say insiders.
“Jensen’s been CEO for 30 years. There were many people that came up with him and got wealthy and so were very loyal. But then they all started to retire,” says one Nvidia employee.
“Now this has all come out — and there’s more to come — it reminds me of [the nursery rhyme]: ‘All the king’s horses and all the king’s men couldn’t put Humpty together again’.”
The crisis that cost Nvidia its leader began late last month when the New York Times reported that US spy agencies were surveilling Alice Huang, an executive at Megaspeed, a Singapore-based company which received financing from China’s Alibaba and is suspected of AI chip smuggling.
The US authorities believe her to be a Chinese agent who had won the Nvidia CEO’s confidence and was passing intel to Beijing. Nvidia initially dismissed the allegations, saying: “Jensen’s interactions with Ms Huang are not unusual or unexpected.”
On Friday November 6, the FT reported that US intelligence agencies believed Huang had a romantic relationship with the suspected spy and had warned top government officials shortly before Trump flew to Beijing for a summit with Xi Jinping in May, with Huang joining him on the flight.
Soon after the story published, Huang reportedly received a house call from Nvidia’s general counsel Tim Teter — a close ally. Teter asked Huang directly if the allegations were true, and the embattled chief executive said they were, according to Bloomberg and others.
On November 8, Huang acknowledged to employees he had been “unfaithful to my wife”. His admission raised questions about whether he or anyone else at the company had previously lied to the board. Directors launched an independent probe the same day.
Still, the company hoped to save its chief executive, according to multiple people familiar with their discussions.
Directors discussed how they could save the situation if it was proved Huang did not know his paramour was a spy, clearing him of divulging secrets. A promise to improve corporate governance by appointing an independent chair and creating a formal succession plan would mollify investors, they hoped.
But the scandal snowballed, with reports that Teter had attempted to intervene in a commerce department inquiry into Megaspeed. In response to the report, Nvidia says it regularly consults officials, including to provide information and request guidance — and that it works with the government to block smuggling. Trump gave Huang his backing as an “honourable guy,” who had “no idea” Alice Huang might have been a spy. But the US president also disclosed that the FBI was investigating.
What eventually proved terminal were reports that Huang had another alleged affair, this one with Kimberly Powell, the chipmaker’s vice-president of healthcare. The company’s board quickly assembled on Wednesday evening to decide the chief executive’s fate. Early the next morning, before markets opened, Nvidia announced his resignation.
Huang’s supporters in Silicon Valley rallied to defend him on social media. Elon Musk said it would be “an honor” to hire him at SpaceX. Martin Casado, a partner at venture capital firm at Andreessen, posted that it was a “Dark, dark day. Horrible decision for the US and the western world.”
Huang’s resignation will not draw a line under the affair.
Nvidia’s dealings with customers in south-east Asia with ties to China were under fierce scrutiny even before the scandal broke.
Exports of the company’s world-leading AI chips to Chinese buyers are tightly controlled. Huang has pushed for those rules to be relaxed, arguing that controls were counter-productive and lobbying to be able to restart sales in the huge Chinese market.
Chris Miller, professor at Tufts University and author of Chip War, says Huang angered a lot of people in Washington with his position on China. Miller said Nvidia appears to have operated under “the belief that selling to a company that was primarily providing compute to Alibaba wasn’t a problem”.
The control that he held over chip allocation and his advocacy for opensource models — where code and data are made freely available for others to use — also made him enemies in his own backyard in Silicon Valley, even among clients like OpenAI whose creation of ChatGPT would have been impossible without Huang’s early patronage.
Now, he faces tough questioning from US intelligence agencies and both parties of Congress.
On Thursday, Huang was summoned to appear before the US Senate banking committee in December. “Recent reports raise serious concerns about our national security and the protection of sensitive US technology,” wrote Republican senator Tim Scott, the committee chair, in a post on X. “The American people deserve answers.”
In the House, the committees on intelligence and foreign affairs have also asked Huang to testify behind closed doors.
The attention may intensify after control of both houses of Congress changes hands in January. Senior House Democrats opened an inquiry this week into the Trump administration’s handling of Nvidia’s chip sales to China, demanding answers from commerce secretary Howard Lutnick as to how his department greenlit sales to a company linked to an alleged Chinese spy.
“Jensen’s problems are just beginning,” Samuel Hammond, director of superintelligence policy at the rightleaning Foundation for American Innovation in Washington, told the FT this week.
The risk for Huang, said his biographer Stephen Witt in a podcast interview this week, is that it will be hard for him to argue that he did not know about Megaspeed’s alleged violations of export controls.
“Jensen could maybe play dumb and not understand that in an abstract way,” Witt said, “but if he is sleeping with the head of the company he can’t play dumb any more.” Megaspeed has said it has been the subject of investigations by the US and other authorities, but there has been “no evidence of any violations concerning the illicit transfer of chips or any illegal activities”. The White House and commerce department did not respond to requests for comment.
The abrupt change in Nvidia’s leadership is also pulling back the veil on the company’s internal politics and corporate governance. In common with many leaders in Silicon Valley, Huang had free rein over almost all aspects of the business. He accomplished this not by the kinds of super-voting stock held by founders like Meta’s Mark Zuckerberg or Larry Page and Sergey Brin of Alphabet, but through a compliant board that did not require a designated successor nor even elect a chair.
One source says 63-year-old Huang ran Nvidia as a “feudal system” with its own messy dynastic politics.
Huang has appointed his daughter Madison Huang, who first joined as an intern around six years ago, and her husband Nico Caprez to positions of power. His son Spencer also has an executive role.
Multiple current and former colleagues described Huang’s daughter as difficult to work with, ruffling feathers by operating as her father’s de facto chief of staff, despite her official role as a senior director of marketing.
Nvidia declined to comment. Jensen Huang and representatives for his family did not respond to a request for comment.
People close to Nvidia said the founder’s imperial control over the company was difficult to challenge.
“I can’t tell you what a cult this place is,” says a person who has worked with Nvidia. “Jensen is a god, and that’s how he’s worshipped.”
With Huang no longer in control, the role of interim chief executive has fallen to chief financial officer Colette Kress, a longtime Huang lieutenant. Company insiders say she is focused on stabilising the company as the board scrambles to find a new leader.
There are no obvious internal candidates in the frame with Huang’s combination of engineering smarts and industry authority. Outside Nvidia, analysts point to Arm chief executive Rene Haas — a former Nvidia executive — and AMD’s Lisa Su as potential hires. Spokespeople for both executives did not respond to requests for comment.
“Jensen was the supreme deity of Nvidia,” says one investor in the company. “I have no idea who the next most capable person is at the company. If they go for an outsider, that creates a rift.”
The chipmaker’s fortunes are of crucial importance to the tech sector, as it acts as the central node in a sprawling network of expenditure and holdings. The company sees itself as an “anchor investor,” with a total of $142bn of equity investments made or committed at the end of July, and is a buyer of last resort to a huge range of AI infrastructure groups.
Inside Nvidia, despite the chaos and value wiped from their stock, some staff see this as a chance to reset the chipmaker’s culture and introduce governance structures better suited to a company of its size and influence.
“The level of hubris, sense of invincibility and untouchable vibes shared by Jensen, his family and some executives” had made working at the company “intolerable”, says one employee.
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