After Nvidia investigated Jen-Hsun Huang's extramarital affair with alleged Chinese spy Alice Huang, the New York Times reported that Jen-Hsun Huang had also developed an extramarital affair with another senior employee.
Nvidia's stock price fell sharply after that. The company's market value has evaporated by more than $500 billion since last Friday. Some investment institutions downgraded their ratings. One analyst described the incident as "developing like a Shakespearean tragedy."
"Bloomberg" quoted people familiar with the matter as saying that Nvidia's board of directors is working with an outside company to find Huang Renxun's potential successor; Huang Le, who was involved in the scandal and was suspected of engaging in Chinese espionage, is said to have returned to China.
As of late Wednesday (11th) night, Nvidia's board of directors had not issued a statement. BBC reporters contacted multiple company representatives and board members, but received no reply.
Reportedly cheating on female subordinate
The New York Times reported on Wednesday (11th) that five anonymous people who had worked at Nvidia revealed that Huang had an extramarital affair with a senior person who reported directly to him.
The relationship, which has not been revealed before, involved Nvidia Vice President of Healthcare Kimberly Powell. Powell, 48, is married and is Huang’s direct subordinate.
The report quoted the five sources as saying that the relationship between Huang and Powell has been discussed within the company. A reporter from this newspaper once called Huang Jen-Hsun to ask about his relationship with Powell.
Huang Renxun replied: "I don't think you should be talking to me directly." Then hung up the phone.
The New York Times reported that in March this year, Powell attended Nvidia’s annual developer conference GTC in San Jose. Three people familiar with the incident said that someone witnessed Huang Jen-Hsun and Powell being intimate at the hotel, and one of them filmed the interaction between the two on his mobile phone.
Sources said Huang Jen-Hsun's security personnel noticed the filming and took him aside and asked him to sign a confidentiality agreement. The New York Times said it had not seen the video. The BBC was also unable to independently verify the incident.
According to Nvidia's internal code of conduct, employees should avoid "situations where their conduct creates a conflict of interest," including "personal relationships." The company also said it would "expeditiously investigate reports of misconduct."
Nvidia declined to comment, and Powell did not immediately respond to inquiries.
Powell worked as a hardware engineer in 1999 and joined Nvidia in 2008 as a business development staff responsible for the higher education and medical markets.
According to his personal introduction on Nvidia's website, Powell has led the company's higher education and research business, strategic promotion plans, and Nvidia Artificial Intelligence Laboratory. She was promoted to senior director in 2016, leading the AI business development team. The following year, she was appointed vice president of the healthcare business, representing the company at technology conferences and delivering speeches.
According to Business Insider, Powell once described getting the Nvidia job as a "dream come true" in a podcast.
Nvidia board of directors reportedly looking for successor
Nvidia shares fell 8.6% in after-hours trading as reports of a second extramarital affair came to light.
Grindr CEO George Arison said in a recent interview with BBC North America technology affairs reporter Lily Jamali: "Huang Renxun is one of the most important entrepreneurs in the United States." At that time, the possibility of Huang Renxun leaving the company was far less high than it is today.
This is because Huang Renxun's successor candidates are few and far between. One of those picks is Nvidia co-founder Chris Malachowsky. Like Huang Renxun, he has joined the company since Nvidia was founded and has been responsible for product engineering work for many years. He is also the only senior executive in the company with similar qualifications to Huang Renxun.
Although Huang Renxun's children also hold management positions at Nvidia, they are relatively young and have little experience. To permanently replace Huang, the company will likely need to hire someone from the outside.
"Bloomberg" cited people familiar with the matter on Wednesday (11th) saying that Nvidia's board of directors is working with an outside company to find a potential successor to Huang Jen-Hsun; the board of directors is also considering appointing an interim CEO. Nvidia has not commented on this.
Investment institutions downgrade ratings
A number of investment institutions have lowered their ratings on Nvidia amid concerns over corporate governance and possible CEO changes.
Financial institutions Baird and Bernstein Research both lowered their outlook for Huida stock, and Morgan Stanley removed it from its "Top Pick" list.
Stacy Rasgon, chief analyst at Bernstein, even cut its price target in half, saying, "Based on our judgment, what has been revealed so far is probably just the tip of the iceberg. The extent of the seriousness of the matter may not have fully emerged yet."
Analysts also warned that if the United States further restricts chip sales to data centers in China and Southeast Asia, it may impact Nvidia's short-term revenue performance.
The investment rating has been downgraded, which means that investors should remain cautious about potential risks. However, most brokerages currently maintain a "buy" rating on Nvidia.
Over the past four years or so, Wall Street has been almost unanimously bullish on the chip giant. Nvidia's current market capitalization is approximately US$4.2 trillion, making it the second-highest listed company in the world after technology giant Apple.
As CEO and co-founder, Jensen Huang, his early bets on artificial intelligence brought huge returns to the company. In the past five years, Huida's market value has soared by more than 470%, and its stock price hit a high in early October this year.
But since the scandal broke, the company has lost nearly $500 billion in market value.
"Events like Shakespearean tragedies"
In an interview with BBC News, Bob O'Donnell, chief analyst of market research company Technalysis Research, described Huang's possible departure from Nvidia as developing like a Greek tragedy or a Shakespearean tragedy.
He said Huang's departure would raise a host of questions, including who will take over and how new leadership will change the company in the coming years.
"It's unbelievable. His influence was extraordinary... He was a visionary."
R Ray Wang of technology research and consulting firm Constellation Research said that Nvidia is facing a "far-reaching governance crisis" and the company must decide whether the value brought by Huang Renxun's retention is greater than the distrust of stakeholders in him.
He pointed out that this scandal is not so much a crisis for the AI industry as it is a crisis for Nvidia itself. The company must consider if Huang is replaced, whether the new candidate can build partnerships of the same scale as Huang.
He said: "This is the real problem... because many partnerships and investments are based on the trust of all parties in Huang Renxun."
Political pressure is also rising. Members of the U.S. Congress are concerned about whether sensitive U.S. technology or data is at risk.
Three Republican committee chairmen in the United States, including Brian Mast, John Moolenaar and Rick Crawford, have asked Huang to attend a closed briefing on November 18 to explain his dealings with Huang Le and how Nvidia prevents foreign espionage.
Chinese Ministry of Foreign Affairs: The United States should stop fabricating spy narratives
She pointed out that China's scientific and technological progress is driven by independent innovation and open cooperation.
"The United States should stop fabricating so-called espionage narratives to find excuses for implementing technological blockades."
