Nvidia's board of directors is preparing to remove co-founder and chief executive officer Jensen Huang, The Wall Street Journal has exclusively learned. According to sources close to the newspaper, the board could decide on Huang's future at any moment.
Following the report, Nvidia shares fell by around eight per cent in after-hours trading. The stock has declined since the board launched an independent investigation on Sunday. On the same day, Huang acknowledged the affair and apologised in a letter to employees, while the board stated there was no reason to believe national security or Nvidia's secrets were compromised and that it had confidence in Huang and his team.
The cause is two extramarital affairs. The first is with Alice Huang, a Singapore-based executive at Megaspeed, whom US authorities suspect works for Chinese intelligence. The second is with a Nvidia employee; The New York Times was the first to report on this, and the Journal confirmed it through its own source. It is this relationship that significantly alters Huang's position.
Business ethics experts who spoke to Axios earlier this week believed that the affair with Alice Huang alone was not grounds for dismissal, as she is not a Nvidia employee. In 2018, Intel's Brian Krzanich had to resign due to a relationship with an employee. According to the WSJ, the Department of Justice is now conducting multiple investigations linked to Alice Huang, while a Nvidia spokesperson last year claimed there was nothing unusual about the relationship between the two Huangs.
Three House of Representatives committee chairs have requested a closed-door briefing from Jensen Huang on 18 November. Donald Trump stood by Huang this week, stating that Huang told him he did not know Alice Huang was suspected of espionage and calling him an honourable man. Trump's decision to approve the export of Nvidia chips to China, despite security warnings, is now under scrutiny by lawmakers.
Nvidia's board has 11 members, and a simple majority is sufficient to remove the chief executive. In that scenario, Huang would remain the largest individual shareholder, with a stake of around 3.6 per cent. It is unclear who would replace him. The 63-year-old Huang has around 60 direct reports and has repeatedly stated for years that he does not believe in succession planning. Nvidia warns in its own shareholder document that it relies heavily on long-term leadership and that poor succession planning could harm the business.
According to a Bloomberg source familiar with the situation, the board is already working with an external firm to identify potential successors for Huang. The board is also considering appointing an interim chief executive while the search for a permanent replacement continues.
