Nvidia CEO Jensen Huang resigns amid spying scandal and stock plunge

The sudden departure of Jensen Huang

Jensen Huang has stepped down as the chief executive of Nvidia, the company that designs the semiconductors powering the global AI boom. The board of directors announced his resignation on Thursday, making the change effective immediately. This move follows a period of intense scrutiny regarding his personal life and the company's security protocols.

The board had been preparing to remove Huang from his position for some time, according to sources familiar with the matter. These internal plans were first reported by the Wall Street Journal before the official announcement. The ouster marks the end of Huang's 33-year tenure as a co-founder and leader of the firm.

Colette Kress has been named as the interim CEO to steady the ship during this transition. Kress currently serves as the company's chief financial officer and has held that role since joining in 2013. She brings nearly 25 years of experience in finance roles at major tech companies like Microsoft and Cisco.

Spying allegations and export violations

At the center of the scandal are allegations that Huang had a romantic and business relationship with a woman named Alice Huang, also known as Huang Le. U.S. intelligence agencies suspect she was spying for China. The FBI is currently investigating these ties, which have raised significant national security concerns for the United States.

Alice Huang was an executive at Megaspeed International, a Singapore-based data center company that maintains a partnership with Nvidia. Investigators allege that she used her position to gain access to 240,000 AI chips that were specifically banned from being exported to China. Megaspeed is now under investigation in both the U.S. and Singapore for smuggling these restricted components.

The situation has drawn the attention of high-ranking government officials who are concerned about the integrity of U.S. technology. Democratic Senator Elizabeth Warren stated that the departure of Huang does not absolve the company from its responsibilities. She noted that the board and executives still owe Congress answers regarding compliance with U.S. export controls.

Internal scandal and employee reports

In addition to the espionage allegations, the company faced a separate internal scandal involving Huang's personal conduct. Five Nvidia employees came forward alleging that Huang was involved in a romantic relationship with a subordinate. The subordinate was identified as Kimberly Powell, who serves as the vice president of healthcare at the company.

Reports suggest that both Huang and Powell are married to other people. According to two employees, the pair were caught on video appearing affectionate at a conference in March. While the company has not verified the existence of the video, the reports have contributed to the pressure on Huang's leadership.

The combination of these personal and professional scandals created a volatile environment for the company's leadership. The board's decision to oust Huang appears to be a response to the cumulative weight of these allegations. The company is now looking to stabilize its reputation while navigating these complex legal and ethical issues.

Market reaction and financial impact

The news of Huang's resignation and the surrounding scandals triggered a sharp decline in Nvidia's market value. The company's stock price fell nearly 5% to approximately $165.25 by midday on Thursday. This sudden drop potentially erased more than $700 billion in shareholder value in a very short period.

Investors are reacting to the uncertainty surrounding the company's future leadership and its ability to maintain its market position. Nvidia's technology is highly sensitive because it is the primary fuel for the world's leading AI firms. This sensitivity makes the company a frequent target of export controls and geopolitical tension.

Despite the turmoil, the board expressed confidence in the company's ability to continue its current operations. Harvey Jones, who was recently named as the company's first board chair, stated that they expect customer commitments and the product roadmap to continue without interruption. The company will now begin a search for a permanent CEO, considering both internal and external candidates.