Nov 8 (Reuters) - Nvidia said on Sunday its board was probing whether CEO Jensen Huang had been the target of a foreign intelligence effort, after a media report alleged he had a close relationship with a Chinese businesswoman who passed information to Beijing.
Huang said in a message to employees that he had been unfaithful to his wife and took "full responsibility" for his actions, while Nvidia said the CEO was committed to continuing to lead the company without interruption.
The developments are likely to pressure the chipmaker's stock, which has already fallen sharply amid worries about the AI boom's sustainability, and may also raise questions about Huang's future at the helm of the company he co-founded, analysts said.
The New York Times reported last month that Huang had a relationship with Alice Huang, an unrelated former executive of Singapore-based company Megaspeed, who US authorities investigated and concluded was a Chinese intelligence asset.
US authorities have scrutinized Megaspeed, which buys AI chips from Nvidia, over suspicions it helped Beijing gain access to advanced AI chips that are barred from shipment to China.
"The NVIDIA Board is initiating an independent investigation in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort. A committee of independent directors, assisted by outside independent counsel, will oversee the investigation," Nvidia said.
The company said on Sunday that while its board had no reason to believe that either US national security or Nvidia secrets were compromised, its inquiry would examine all available information.
The board has confidence in the CEO and his leadership team, Nvidia said, adding that Huang fully supports the review and has committed to cooperating with it.
US President Donald Trump said on Sunday he had not spoken to Huang about the allegations, but called him a fine person. "I hope everything's fine. He's done such an incredible job," he added.
When asked if he believed he should have acted on intelligence when he was briefed about it, Trump said: "No, I don't think so. I think he's an honorable guy. I think he probably has an excuse for it. You have to hear it."
The New York Times had reported that Trump was briefed about the intelligence findings roughly a year ago and chose not to do anything with the information.
US Secretary of State Marco Rubio declined to comment on Huang when asked by reporters earlier in the evening.
China’s foreign ministry did not immediately respond to a Reuters request for comment.
Huang said on Sunday that he was "committed to protecting Nvidia and supporting America's national security."
Megaspeed did not respond immediately to a request for comment outside business hours.
PILING PRESSURE ON NVIDIA
The investigation adds to pressure on Nvidia at a time investors are already pulling back amid uncertainty over the sustainability of the booming AI market that made the chipmaker one of the world's most valuable companies.
The $4.5 trillion chipmaker's shares have given up all their gains this year amid a broader tech market rout triggered by worries over the pace of AI spending.
Huang, who has led Nvidia for more than three decades, has been central to its rise to become a dominant supplier of AI chips.
"There is clearly risk that Jensen could be removed as CEO depending on the Board investigation and this will add risk to the stock as he is so important to the Nvidia story and strategy globally," said Dan Ives, partner and senior managing director at Yorkville Ives & Co.
"This is a black eye moment for Jensen and will spark multiple congressional inquiries at a minimum and will create an overhang on the stock," Ives said, adding that the news would also increase scrutiny about selling chips to China.
Huang admitted to having been unfaithful to his wife, saying, "My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry."
Addressing his colleagues, board, partners and shareholders, Huang said: "My responsibility is to serve you and be worthy of your trust. I have fallen short of that responsibility. I am fully committed to NVIDIA and will work to earn back your confidence."
In late October, he had told Bloomberg News that his relationship and interactions with Alice Huang were related to Megaspeed and were "completely normal and not unusual".
Josh Gilbert, lead analyst at trading platform eToro, said Huang's fingerprints were on every part of the company's rise, so any doubt over his position would matter to shareholders.
"While the investigation is likely to dent sentiment, it won't alter anything long-term unless it leads to a change at the top, at which point it becomes a completely different ball game," Gilbert added.
Top Republican lawmakers in the US House of Representatives had already called on Huang to brief Congress this month about the New York Times report.
The report raises "significant national security concerns regarding (China's) access to sensitive US technology and information," the lawmakers said in a letter dated November 4. "It is vital that Congress determines the extent to which US national security has been placed at risk," they added.
US export controls since 2022 have sought to restrict China's access to advanced Nvidia chips and the equipment needed to make them.
