NVIDIA plunges around 8% intraday due to suspicions of Jensen Huang's 'Chinese spy affair' (comprehensive)

(New York = Yonhap News) Correspondent Soo-jeong Lim = Nvidia's stock price fell sharply on the New York stock market on the 9th (local time) as Nvidia CEO Jensen Huang admitted an affair with a female businesswoman suspected of being a spy linked to Chinese intelligence agencies.

As of 9:40 a.m. Eastern time, Nvidia's stock price was trading at $175.12, down 6.17% from the previous trading day. NVIDIA's stock price fell to $170.24 at one point during the day, falling 8.79%.

CEO Jensen Huang acknowledged the affair and apologized to employees in an internal memo over the weekend, and as Nvidia's board of directors began an investigation into the related allegations, management uncertainty appears to be weighing on the stock price.

Jensen Huang's affair partner was Alice Huang, a former executive at Megaspeed International, a Singaporean data center company. She has been under surveillance by U.S. intelligence authorities on suspicion of approaching CEO Hwang and attempting to collect advanced artificial intelligence (AI) semiconductor secrets and U.S. administration trends.

Nvidia's board of directors issued a statement the day before and said, "We have begun an independent investigation regarding recent reports that founder and CEO Jensen Huang was targeted by a foreign intelligence agency."

CEO Hwang also said in a separate message, "I was unfaithful to my wife. My actions hurt my wife and children, and there is no room for excuses for what I did. I apologize to my family and all employees."

Nvidia's board of directors expressed confidence in CEO Hwang, saying there is no reason to believe that U.S. national security or company secrets have been violated.

However, concerns are being raised among investors that the results of this investigation will make CEO Hwang's future uncertain and that Nvidia may face a management vacuum.

CEO Hwang is a key figure who has led NVIDIA for over 30 years and grown it into the world's largest AI semiconductor company. Given that there is no clear successor, it is assessed that his possible resignation could cause significant uncertainty in NVIDIA's management stability.

Dan Ives, senior managing director at Yorkville Ives, said, "There is a clear risk that Jensen Huang will step down as CEO depending on the results of the board's investigation. Considering his importance to NVIDIA's global business and strategy, this will be an additional risk factor for the stock price."

There is also analysis that this incident could have repercussions beyond NVIDIA and the entire AI ecosystem.

NVIDIA has exerted influence across the entire industrial ecosystem by not only supplying AI semiconductors but also supporting investment and financing of AI companies such as OpenAI and Coreweave.

If uncertainty about CEO Hwang's leadership continues for a long time, NVIDIA's investment decisions and product launches may be delayed, which may also affect related companies.

Mohamed El-Erian, former CEO of Pimco, said, “Nvidia is a company that is systemically important to the technology industry, financial markets, and the overall economy,” and pointed out that it is difficult to estimate the impact issues surrounding key management and corporate governance will have on corporate value.

Attention is also being paid to the impact this incident will have on NVIDIA's semiconductor business in China.

CEO Hwang has maintained a close relationship with President Donald Trump and has actively advocated for easing restrictions on exports of cutting-edge semiconductors to China. However, as suspicions that it has become the target of Chinese intelligence agencies' espionage activities have arisen, there are observations that the US authorities' surveillance surrounding Nvidia's semiconductor sales to China may be strengthened.

Meanwhile, a report from an American short-selling investment company that pointed out the “uncomfortably close relationship” between CEO Hwang and Alice Hwang last May is also being belatedly being reexamined.

Culper Research, a short-selling investment firm based in New York, mentioned this relationship in a report that presented the basis for short-selling (betting on a decline in the stock price) of NVIDIA stock.

Culper Research said in a report that CEO Hwang was spotted attending a party with Alice Hwang in Taiwan in June 2024, and that they were also seen eating together at a restaurant in Taiwan in May of last year, a month after the U.S. semiconductor export control measures were announced.

In addition, citing remarks by a former Nvidia employee, it was reported that questions were raised within the company about whether there was a 'special relationship' between CEO Hwang and Megaspeed. A current Megaspeed employee also said the company had a "very close relationship" with CEO Hwang, the report said.