The independent directors retained a former acting U.S. attorney to examine reports that the chief executive was the target of a foreign intelligence effort, while saying they have no reason to believe company secrets or national security were compromised.
The independent directors of Nvidia, the Santa Clara chipmaker whose processors are used to train nearly all major artificial intelligence models, said on Tuesday that they had hired a former top federal prosecutor to investigate reports that the company’s co-founder and chief executive, Jensen Huang, was the target of a foreign intelligence effort.
“The independent members of the NVIDIA Board have retained former acting U.S. Attorney of the Southern District of New York Joon H. Kim and his firm Wachtell, Lipton, Rosen & Katz to conduct a thorough and independent investigation as was announced on Sunday,” the board said in a statement reported by CNBC. The review will examine whether company secrets or national security were compromised.
Nvidia’s shares fell about 6 percent on Tuesday, CNBC reported, after closing 4.27 percent lower on Monday. The company is scheduled to report third-quarter results on Nov. 17.
What the company has said
The board opened the review on Sunday, Nov. 8, after The New York Times and the Financial Times reported that U.S. intelligence agencies had concluded that an executive affiliated with Megaspeed, a cloud computing company and Nvidia customer, was passing information to Beijing, CNBC reported. The Inquirer has not independently verified those reported intelligence findings.
In its Sunday statement, Nvidia said Mr. Huang “fully supports the review and has committed to cooperating with it.” The board also said it had no reason to believe that national security or Nvidia secrets had been compromised.
In an email to employees, Mr. Huang acknowledged a personal relationship with the Megaspeed executive and apologized. He wrote that he had “fallen short” of his responsibility to colleagues, the board, partners and shareholders. “My actions hurt her and our children. There is no excuse for what I did,” he wrote, referring to his wife, while emphasizing that he is an American and supports U.S. national security. A company representative said Mr. Huang was committed to continuing as chief executive without interruption.
China’s Foreign Ministry spokesman, Guo Jiakun, said on Monday that the “so-called Chinese spy narrative” was unsubstantiated, Reuters reported.
Support from the White House and Silicon Valley
President Trump praised Mr. Huang on Sunday while saying they had not spoken about the investigation. “I think he’s an honorable guy. I think he probably has an excuse for it. You have to hear it,” Mr. Trump told reporters. “He’s done an amazing job for our country.”
Shaun Maguire, a partner at Sequoia Capital, wrote on X that Mr. Huang is “one of the greatest entrepreneurs of this generation” and “irreplaceable for America’s AI leadership.” Elon Musk reshared the post and said he agreed.
A governance test before earnings
For investors, the question is less the personal matter than leadership risk at a company whose founder is closely identified with its strategy. “From an investor perspective, the clear worry is, does Jensen stay on as CEO? The Street would say probably likely, but given the board investigation, anything could happen, and that creates a huge uncertainty,” Dan Ives, senior managing director at Yorkville Ives & Co., told CNBC. He called any talk of replacing Mr. Huang “comedy” and said Nvidia remained two to three years ahead of China in A.I. chips.
Joachim Klement, an investment strategist at Panmure Liberum, told CNBC the market impact was contained to Nvidia for now, but that if Mr. Huang’s position were “endangered,” Nvidia might pull back its support for other companies, with effects spreading to other chip stocks. Other semiconductor shares rose on Monday.
The review also arrives as Nvidia faces questions from critics and politicians over what the company knew about sales of its restricted A.I. chips to Chinese companies, CNBC reported. No findings from the board’s review have been released, and the board has not said how long the review will take or whether its findings will be made public.
Why it matters in California
Nvidia is headquartered in Santa Clara and is one of the most valuable publicly traded companies in the world, so its share price is felt in the retirement accounts and pension funds of many Californians, as well as in the Bay Area’s technology economy. Its results on Nov. 17, followed by a company conference in Washington at the end of the month, will be the first chance for analysts to question executives since the review began.
Nvidia did not respond to questions sent Tuesday afternoon.
Wendell Yamashiro covers business, technology, labor, trade and the Bay Area economy for Trade and Commerce. More from Wendell Yamashiro
