Nvidia's board confronts an investigation into CEO Jensen Huang's alleged affair with a woman suspected of being a Chinese spy, raising questions about the board's independence and the company's national security practices.
The FBI is probing Huang's relationship, President Donald Trump said Monday. Nvidia's board launched an internal investigation "regarding the national security concerns raised in news reports," according to an email Huang sent to employees. The company stated it had no reason to believe US national security or Nvidia secrets were compromised.
Huang, 63, co-founder and owner of 3.6% of Nvidia's stock, has no obvious successor and maintains close ties to Trump. Nvidia stock fell Monday but trimmed losses to close 4% lower as some investors bet Huang could survive.
Law professor Ann Lipton called this a "honey-pot scandal" - an espionage ploy in which an operative entraps a target through feigned romantic interest. "There have definitely been affair scandals and sexual-harassment scandals. But honey-pot scandals? No," Lipton said.
Nvidia operates without a board chair among its 11 directors. Three independent directors have served since the 1990s and only two joined since 2021. Marc Goldstein, head of US research for proxy adviser Institutional Shareholder Services, said board members running the investigation should hire their own legal advisers and that long-serving directors should be kept away from the probe to avoid shareholder challenges to its independence.
Washington has imposed restrictions on AI chip exports to China since 2022. Last year the Trump administration allowed Nvidia to resume certain China shipments under an arrangement in which the US government receives a cut of China chip sales.
Investors should monitor Nvidia stock (NVDA) for developments in the board's investigation, any changes to executive leadership, and implications for US-China semiconductor policy.