Nvidia's board of directors confronts a critical question: whether the chipmaker can survive without Jensen Huang, its co-founder and CEO, who is now under investigation for an alleged affair with a woman suspected of working with China's intelligence agency. The disclosure has rattled shareholders, with Nvidia's stock shedding 10 percent of its value, or roughly $450 billion, over two trading days. Huang is facing an independent board inquiry into the alleged relationship, a shareholder lawsuit and questions from lawmakers. The relationship was with a former female executive at an Nvidia customer company, heightening concerns about potential conflicts of interest.
Few executives in corporate history have been as closely identified with their companies as Huang is with Nvidia. Over three decades, he has led the chipmaker as it became one of the world's most valuable firms, with many investors viewing him as equally essential to the company as Elon Musk is to SpaceX or Steve Jobs was to Apple. A Columbia Business School professor who studies corporate governance told CBS News that the situation "exposes how dependent the company is on this one person." A tech analyst estimated Nvidia could lose as much as 30 percent of its valuation if Huang is removed, though most investors currently expect him to remain in his role.
Corporate governance experts said Huang's alleged relationship appears to violate Nvidia's code of conduct, which prohibits personal relationships that could create conflicts of interest and requires employees to maintain high ethical standards. Huang admitted in a message to employees that he was unfaithful to his wife and apologized for hurting her and their two children, who also work at Nvidia. A consulting firm executive called Huang's conduct "definitely a violation" of company policy. However, experts acknowledged that Huang may receive more lenient treatment than other employees due to his centrality to Nvidia, especially given the company's importance to US artificial intelligence development amid competition with China.
Nvidia's board includes 11 members, with Huang serving alongside 10 independent directors including a California Institute of Technology professor and the former president of Taco Bell International. Governance experts recommended the board hire a law firm to assist with the investigation and immediately develop a succession plan. Huang currently has more than 60 direct reports in a corporate structure that keeps him at the centre of decision-making. If he were to leave, potential successors include Nvidia co-founder Chris Malachowsky, a senior technology executive, and Chief Financial Officer Colette Kress. A Harvard Business School professor noted the board faces an extremely difficult position, saying the company has "almost no good options."
For Nvidia investors and employees, uncertainty about the company's leadership stability and the potential impact of ongoing investigations creates risk to both share valuations and business continuity.