U.S. Congress, FBI investigation, class action lawsuit... Jensen Huang scandal 'makes waves'

(San Francisco = Yonhap News) Correspondent Kwon Young-jeon = The repercussions of the affair between NVIDIA CEO Jensen Huang and a woman suspected of being a Chinese spy are rapidly expanding.

According to the U.S. political world and the Silicon Valley information technology (IT) industry on the 9th (local time), the Democratic Party, which won a landslide victory in the recent midterm elections, is directly targeting CEO Hwang, turning this incident into a political offensive against the Donald Trump administration and the Republican Party.

President Trump is protecting CEO Hwang every day, but with the start of the FBI-level investigation, the already announced congressional investigation and the board's independent investigation are expected to come under triple pressure.

As CEO risks emerged, Nvidia's stock price fell sharply. Attention is being paid to whether there will be any change in CEO Hwang's future, who is facing a crisis as shareholders file a class action lawsuit.

◇ Democratic Party “Significant concern”… Also takes aim at Trump's 'suspicion of condoning'

The Democratic Party, which took control of both the Senate and House of Representatives in the midterm elections held on the 3rd (local time), publicly criticized the Chinese spy suspicions involving CEO Hwang.

Democratic Party leader Hakeem Jeffries, who is expected to become the next Speaker of the House of Representatives, said regarding CEO Hwang's case, "It will definitely be a topic to be discussed and a matter of significant concern."

Senator Elizabeth Warren, the Democratic ranking member of the Senate Banking Committee, also demanded that CEO Hwang appear before Congress and provide an explanation. In addition, we urged China to limit the export of advanced AI semiconductors and manufacturing equipment and to implement the 'AI Overwatch Act', 'Match Act', and 'Semiconductor Security Act', which require tracking exported semiconductors.

Accordingly, there is a growing possibility that CEO Hwang's efforts to obtain approval for export of AI chips to China during Trump's second term will be in vain.

It appears that the Republican Party will not take this issue lightly either. The House Foreign Affairs Committee, the Special Committee on U.S.-China Strategic Competition, and the Intelligence Committee, all led by Republican chairpersons, previously sent a joint letter to CEO Hwang, requesting that he attend a closed-door joint briefing.

President Trump revealed that he had a phone call with CEO Hwang that day and said, "I trust him."

However, the Democratic Party is poised to raise the 'Jensen Huang scandal' as a political issue by even raising the claim that President Trump is responsible.

Specifically, CEO Hwang's affair and the suspicion that President Trump turned a blind eye to intelligence that his counterpart, Alice Huang (Chinese name: Huang Le), may be a spy for the Chinese intelligence agency even though he was informed a year ago are expected to become major issues.

When asked by reporters about this, President Trump said that such information may have been included in the report he received, but avoided giving an exact answer, saying, "It had no particular effect on me."

President Trump mentioned that the FBI had begun investigating CEO Hwang's case, but maintained a defensive stance, saying, "I don't think he will have any problems."

◇ Will I be kicked out of NVIDIA? Group lawsuit filed for damages due to stock price 'plummeting alone'

The market is weighing whether to retain CEO Hwang, who is already facing the greatest crisis. Wall Street investors and academics fought a war of words, divided into those who said he should step down and those who said he could not be replaced.

Yorkville Ives partner Dan Ives, a leading technology stock expert on Wall Street, called the incident "a black eye moment" and predicted that he would likely be dismissed depending on the results of the board's independent investigation.

Gary Black, partner at Future Fund, also said it was doubtful whether CEO Hwang could be retained and predicted that institutional investors would continue to reduce their stakes due to CEO risk.

Jeffrey Sonnenfeld, a professor at Yale University Graduate School of Business, estimated that CEO Hwang's chances of remaining in office were only half and even mentioned former Google CEO Eric Schmidt as an alternative.

On the other hand, Sean McGuire, a partner at Sequoia Capital, pointed out CEO Hwang's mistakes but expressed the opinion that he was "an irreplaceable person."

As the scandal grew, the status of CEO Hwang, who was considered the leader of NVIDIA itself, was greatly shaken, and the market reacted immediately.

Nvidia's stock price plummeted 4.27% on this day, while the Standard & Poor's (S&P) 500 index and the Nasdaq index, which focuses on technology stocks, soared around 2%.

As the stock price plummeted, shareholders filed a class action lawsuit claiming that CEO Hwang and Nvidia concealed suspicions of involvement with Chinese spies and security risks.

◇ Jensen Hwang closed his mouth after admitting to having an affair… Did the spy really not know?

Amidst the intense controversy, CEO Hwang has remained silent and has not attended any scheduled external events.

Since admitting to the affair and apologizing in an in-house message the day before and expressing his intention to cooperate with the board of directors' investigation, he has not only not appeared in public but has also avoided contact with the media.

Originally, on this day, CEO Hwang was scheduled to attend Antropic's event ahead of its listing and give a talk, as well as attend the AI ​​startup's New York event as a speaker, but both schedules were canceled.

He complained of the injustice to President Trump over the phone, but given President Trump's statement that "I called to see if he was okay," it appears that President Trump, not CEO Hwang, made the call first.

According to President Trump, CEO Hwang maintained his position during the call, saying, "I had no idea that the person in question was a spy."