The chipmaker has hired outside counsel to investigate reports of a foreign intelligence effort. A separate report about a relationship with a company executive adds to the questions facing directors.
By Jordan Avery | M•I•A MEDIA GROUP
Nvidia’s board met Wednesday evening to consider whether Jensen Huang should remain chief executive of the chipmaker he co-founded in 1993, Reuters and CNN reported, citing people familiar with the matter. The meeting came three days after directors publicly expressed confidence in Huang and announced an independent investigation into reports that he had been targeted by a foreign intelligence effort. As of early Thursday, Nvidia had announced no decision on his future.
The board’s deliberations followed a New York Times report that Huang had an extramarital relationship with an Nvidia executive who reported to him. Reuters said it had been unable to independently verify that report. The allegation raises a workplace question for directors about whether company policies were followed in a relationship involving a direct report. The inquiry Nvidia announced Sunday centers on a different question about possible foreign intelligence activity.
What Nvidia has confirmed
In a Sunday email to employees that Nvidia later made public, Huang acknowledged being unfaithful to his wife, apologized and pledged to cooperate with the board’s inquiry. His statement did not identify the person involved. The Associated Press, citing reporting by The New York Times, said U.S. intelligence had determined that business executive Alice Huang was gathering information for Beijing. China’s Foreign Ministry rejected the espionage allegation.
Nvidia’s board said Sunday it had no reason at that point to believe that company secrets or U.S. national security had been compromised. On Tuesday, the independent directors said they had retained Joon H. Kim, a former acting U.S. attorney for the Southern District of New York, and his law firm to conduct the investigation. Nvidia has yet to release findings.
The national security question matters because Nvidia designs advanced processors used to train and run artificial intelligence systems. U.S. officials have sought to restrict China’s access to some of those chips. Reuters reported that U.S. intelligence was examining whether Alice Huang helped facilitate shipments of Nvidia chips to Chinese companies. Whether restricted chips reached those companies and whether anyone obtained sensitive information from Nvidia are among the unresolved questions raised by the reporting.
The succession question
Huang has served as Nvidia’s chief executive since its founding. A departure would force directors to decide who can run the company immediately and who should set its long-term technology strategy. Reuters reported that analysts and investors have pointed to Chief Financial Officer Colette Kress and senior engineering executive Ian Buck as possible successors. Nvidia has announced no successor.
Nvidia shares fell more than 8% in Wednesday’s extended trading after The Wall Street Journal reported that the company was preparing to remove Huang, according to Reuters. The sell-off showed how quickly investors reacted to the prospect of a leadership change, days before they were due to hear from Nvidia about demand for its chips and the company’s outlook.
Nvidia is scheduled to report quarterly results Tuesday, Nov. 17, with an investor call at 5 p.m. Eastern time. If the board has yet to explain its decision by then, the call will be the next scheduled opportunity for analysts to ask who is running the company, how directors are overseeing the investigation and how Nvidia plans to keep its product development and customer commitments on track.