Nvidia shares fall as board said to weigh removing CEO Jensen Huang; market value down about $600 billion

Nvidia, the world's most valuable and leading AI chip company, is going through a major crisis. Co-founder and chief executive Jensen Huang is facing the biggest difficulty of his career. The board is reported to be seriously considering a decision to remove him from the post.

The background to the development is described as two alleged extramarital relationships of Huang and a suspected Chinese espionage case linked to US national security. The board has not only prepared to remove him but has also begun looking for new leadership to take charge of the company in his place.

The controversy began when details emerged of Huang's personal relationship with Alice Huang, a former executive of the Singapore data company Megaspeed. Megaspeed was an important customer of Nvidia. The matter turned serious when US intelligence agencies expressed strong suspicion that Alice Huang was involved in Chinese espionage activities, and that an attempt was being made through this to steal secrets of Nvidia's highly advanced and sensitive AI technology.

After the matter came out and questions were raised about the company's image, Jensen Huang on his own initiative wrote an emotional letter to employees. In it he admitted his mistake and publicly apologised to his wife for infidelity. But the confession did not end the controversy. Instead, serious questions began to be raised about the company's security policies and corporate governance.

The Alice Huang matter had not even died down when another report claimed that Huang's romantic relationships were not limited to an executive of an outside company. He was also said to have had a relationship with Kimberly Powell, vice president of the healthcare division, who works directly under him in his own company. Under the rules of large companies, a person in a senior position having such a relationship with a direct subordinate is considered a serious violation of the code of conduct. This second matter caused great anger on the board and trust in Huang's way of working broke down.

Given the gravity of the matter, the board has decided to have the entire controversy investigated fairly and in depth. The well-known US external law firm Wachtell, Lipton, Rosen & Katz has been formally appointed to oversee the inquiry. Initially the company had clarified that it had found no concrete evidence of any confidential information or data having leaked outside. But as soon as the second relationship within the company came to light, all calculations changed and the board had to take strict steps.

Meanwhile, US politics has also heated up in view of possible national security threats. The chairs of three major committees of the US Congress have taken the matter seriously and have clearly ordered Jensen Huang to appear at a highly confidential closed-door briefing on November 18.

The leadership crisis at a giant company like Nvidia has had a direct and swift effect on the stock market. As news of the possible removal of Huang as CEO spread, fear gripped investors and a rush to sell shares began. In after-hours trading, Nvidia shares fell about 8 per cent. Because of the controversy of the past few days, the company's total market capitalisation is estimated to have fallen by $600 billion, raising concern among investors worldwide.