Chip company: Nvidia boss Huang resigns

There had been rumors about this for a long time, but now the camel's back was overflowing. Nvidia announced Huang's immediate resignation on Thursday afternoon German time. The board of directors of the California-based group met for consultations on Wednesday (local time), as reported by the New York Times and the Wall Street Journal, among others. The shares of the chip company, which is one of the most valuable companies, initially fell again after the US stock exchanges opened on Thursday, but recovered over the trading day and ended up a good ten percent higher.

In the past few days, the media had reported that the 63-year-old company founder and multi-billionaire had a relationship with a woman who, according to suspicions in US security circles, could be a Chinese spy. Huang, who has been married for over 40 years, confirmed an extramarital affair in an email to Nvidia employees.

The New York Times and the Wall Street Journal also reported on Wednesday that the company boss had had another affair with a top manager of the company who reported to him. Huang and Nvidia had not yet commented on this. When it comes to affairs in companies, American boards of directors often have a very low tolerance level; in several cases they have already cost top managers their jobs. Now it's happening to Huang too.

Huang's name is inextricably linked to Nvidia. He had been the chip company's boss since it was founded more than 30 years ago and was considered the driving force behind the company's rise from Silicon Valley. Until a few years ago, this was primarily known for computer graphics cards. When it became clear that the technology behind it was suitable for certain types of AI calculations, Huang invested billions to optimize the technology, even against the advice of employees.

“Nvidia is the center of the AI ​​universe.”

Nvidia's AI chips ultimately played an important role in the progress of large language models such as Chat-GPT or Claude. Nvidia's management structure was exceptionally tailored to Huang. About 60 managers reported directly to him. This meant he was more involved in day-to-day business than other heads of large corporations - and is therefore now more difficult to replace. This can be seen in Nvidia's share price alone. If there were crown princes who could take over relatively quietly, investors would not be so worried that Nvidia would be less successful without Huang's leadership.

“Nvidia is the center of the AI ​​universe,” says Raphael Thuin, head of capital market strategy at asset manager Tikehau Capital, to the Süddeutsche Zeitung. And Jensen Huang was the face of Nvidia and therefore the entire industry. Nvidia not only produces the chips that are needed for new technologies such as language models. The company also participated in financing the entire AI ecosystem - for example through loans and investments in data center operators, who in turn bought chips from Nvidia.

The company's importance for the AI ​​industry can hardly be overestimated, says Thuin. However, there is also a ray of hope in the current difficult situation: “The shares of other AI companies have not fallen along with Nvidia in the past few days.” In fact, the prices of some competitors' shares have even risen. “The markets have apparently processed the bad news and partly priced it in,” says Thuin.

Because of its size, Nvidia also has a lot of weight in many stock indices and therefore also in ETFs that are based on these indices. In the ETFs based on the MSCI World that are popular in Germany, the company's shares have a weight of around five percent. Price fluctuations in such large tech companies can therefore also be noticeable in the portfolios of private investors who invest exclusively in broadly diversified funds.

Some members of the board of directors are said to favor CFO Colette Kress as a possible successor

According to information from the news website Semafor, some members of the board of directors favor CFO Colette Kress as a possible successor. She should also take over Huang's tasks for the time being. The financial service Bloomberg reported, citing an informed person, that one idea was to fill the top position on an interim basis and then look for a long-term solution.

Democratic senators put pressure on Trump administration

Democratic Senators Elizabeth Warren and Chris Coons, meanwhile, called on President Donald Trump's administration to preserve all records related to Nvidia's chip exports and Huang's affair with the would-be spy. In Congress, Democrats will take over the majority in both chambers from Trump's Republicans in January and could initiate parliamentary investigations.

In recent years, Huang has repeatedly appeared as a supporter of selling newer Nvidia chips to China. His reasoning is that the People's Republic will otherwise develop its own semiconductors that could compete with Nvidia on the global market and thus undermine the US's AI technology leadership.

Note: This text is the expanded and revised version of an already published text.