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Nvidia shares drop after CEO Jensen Huang under investigation
Nvidia CEO Jensen Huang is under internal investigation after admitting in a letter to employees that he had an extramarital affair with a Chinese business executive who U.S. intelligence officials suspect is a spy, and on Monday, there were financial fallouts from the revelations.
SANTA CLARA, Calif. - Nvidia CEO Jensen Huang is under internal investigation after admitting in a letter to employees that he had an extramarital affair with a Chinese business executive who U.S. intelligence officials suspect is a spy – resulting in some financial fallouts from the revelations.
Nvidia shares drop
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Nvidia CEO Jensen Huang faces investigation over affair with suspected Chinese spy
Nvidia's board has launched an independent investigation after CEO Jensen Huang acknowledged an affair with a woman reportedly linked to Chinese intelligence. Three Republican House committee chairmen are seeking a closed-door briefing, as national security experts raise concerns about potential espionage and the security of sensitive AI technology. KTVU's Betty Yu reports.
Nvidia shares dropped more than 7 percent in premarket trading and remained down more than 6 percent shortly after trading began on Monday.
Given Nvidia's stature as one of the world's most powerful and profitable tech companies, the investigation has sent ripples across the tech sector.
"What the market is always looking for is certainty," financial advisor Jason Matthews said, pointing to the turbulence created by the news.
Huang apologizes
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Huang apologized to the semiconductor company, his wife, and his family. His two adult children and son-in-law work at Nvidia, based in Santa Clara.
The controversy centers on Alice Huang, a Chinese citizen and former executive at Megaspeed, a data center firm that ranks among Nvidia's top customers. Megaspeed has purchased roughly $5 billion worth of Nvidia's coveted, high-powered artificial intelligence chips—technology that some U.S. intelligence officials warn China should not possess due to national security concerns. Last year, intelligence officials identified Alice Huang as a possible Chinese spy.
National security analysts and industry experts warned that the relationship could carry broader implications for American technological leadership.
"Nvidia is light years ahead in the development of the chips," said Ahmed Banafa, a professor and technology expert at San Jose State University. "There's certain ways, certain designs, certain programs, internal tools that nobody knows about it except, you know, the people who work at Nvidia, and China would like to know about that. That's going to help them accelerate the development, understand what is next, so they can gain advantage in the United States and stop relying on Nvidia chips."
‘Deeply concerning’
What's next:
Hal Kempfer, a national security analyst and retired Marine Corps intelligence officer, described the situation as deeply concerning.
"The company she works for had been flagged as possibly working with Chinese intelligence, with the Chinese government," Kempfer said. "One has to assume that she, you know, probably was—this was part of a Chinese intelligence-gathering operation, whether it was for compromising him, influencing his decisions."
An Nvidia spokesperson confirmed the company has initiated an internal inquiry into the situation, adding that Huang will remain CEO while the probe continues.
Huang is a close ally of President Donald Trump. In December of last year, Nvidia received approval from the Trump administration to sell certain chips to China. Secretary of State Marco Rubio informed the president of the affair and its potential connection to Chinese espionage several months ago, but no action was taken at that time.
Congressional leaders have formally requested that Huang appear before them on Nov. 18 to address the situation directly, one day after Nvidia is scheduled to release its latest earnings report.
The Source: Information for this story comes from Nvidia, Fox Business, The Associated Press, Hal Kempfer, a national security analyst and retired Marine Corps intelligence officer, financial advisor Jason Matthews, Ahmed Banafa, a professor and technology expert at San Jose State University.