US President Donald Trump revealed on Monday that the FBI is looking into Nvidia CEO Jensen Huang, amid allegations of an affair with a Chinese businesswoman believed to be a spy for Beijing. Trump expressed surprise at the allegations, stating that Huang, one of his closest allies in Silicon Valley, had assured him he was unaware of the woman's alleged ties to Chinese intelligence.
The allegations have led to a significant backlash, with Nvidia's shares plummeting over 4 percent on Monday. The company's board has initiated an internal investigation into whether Huang was targeted by a foreign intelligence effort. This probe has raised concerns about Huang's future, given Nvidia's status as the world's most valuable chipmaker and Huang's crucial role in the AI boom.
Jensen Huang, a 63-year-old CEO, enjoys rock-star status globally, particularly in Asia, where he often interacts with fans and devotees. He holds a roughly 3.6 percent stake in Nvidia, according to LSEG data, and maintains a tight grip on the company through a flat organizational structure. Despite his significant influence, Huang does not have majority voting control due to Nvidia's lack of dual-class shares.
The New York Times reported that Trump was briefed on Huang's relationship with the woman, who allegedly provided information to the Chinese government. However, the president chose not to act on this information. In response to the allegations, Chinese Foreign Ministry spokesperson Guo Jiakun dismissed the claims as "groundless accusations, slander, and smear."
Huang's relationship with Trump has been marked by several favorable policy developments for Nvidia, with the president praising Huang and awarding him the nation's highest honor for scientific achievement in October. On the same day, Trump disclosed buying up to $1.6 million and selling up to $1 million of Nvidia shares during the summer.
Analysts believe that while there is uncertainty around succession, the investigation is unlikely to result in Huang stepping down. "Nvidia is not an ordinary company and Jensen is not an ordinary CEO; he is Nvidia, clearly sets the long-term strategy and direction, and pulls most of the company's strings himself," said Stacy Rasgon, an analyst at Bernstein.
The allegations have led to legal action, with Nvidia shareholders filing a proposed class-action lawsuit against Huang and the company, accusing them of defrauding shareholders by concealing Huang's ties with a suspected Chinese spy. The incident may also lead to tighter legislation on China's access to AI chips, with US House of Representatives Democratic leader Hakeem Jeffries calling for the passage of an annual defense bill with restrictions on chip sales to China.
Key points
- US President Donald Trump revealed that the FBI is investigating Nvidia CEO Jensen Huang over his alleged affair with a Chinese businesswoman suspected of being a spy.
- The allegations have led to a significant backlash, with Nvidia's shares plummeting over 4 percent on Monday and a proposed class-action lawsuit filed against Huang and the company.
- The incident may lead to tighter legislation on China's access to AI chips, with US lawmakers calling for restrictions on chip sales to China.
