Nvidia faces continued scrutiny over China chip ties and affair with major US law firm hired to investigate
A major US law firm has been appointed to conduct an investigation into the Nvidia boss’ affair with an alleged Chinese spy, alongside the FBI.
The company at the centre of a Chinese spy affair scandal has appointed a major US law firm to conduct an independent internal investigation.
Jensen Huang, the CEO of American tech company Nvidia, announced on Sunday that he had been having an affair with Alice Huang — a woman who was later identified as an alleged Chinese spy.
The FBI launched an investigation to determine if the 63-year-old was targeted by a foreign intelligence operation but on Wednesday, Nvidia’s independent board members announced a separate probe.
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By continuing you agree to our Terms and Privacy Policy.The company revealed they had retained law firm Wachtell, Lipton, Rosen & Katz to conduct an investigation, with former acting US Attorney for the Southern District of New York, Joon Kim, part of the team appointed to lead the probe.
The corporate law firm is known for its work handling many high profile mergers and disputes, with Mr Kim himself a veteran federal prosecutor according to the Australian Financial Review.
Impacts on Nvidia’s market value
Nvidia has shed about $US430 billion ($A625 billion) in market value over two sessions as new reports deepened questions about chief executive Huang’s relationship with a Chinese woman alleged to be a spy.
The controversy escalated on several fronts on Tuesday as allegations emerged that Mr Huang’s relationship with Ms Huang aided at least $US7.5 billion ($A10.9 billion) in Nvidia chip shipments to China and that US Secretary of State Marco Rubio had previously briefed President Donald Trump on the affair.
Senate Democratic Leader Chuck Schumer demanded answers from the administration and tighter curbs on chip exports to China, while the company’s independent directors hired outside counsel to investigate.
Republican US Senator Kevin Cramer from the Senate Banking Committee called on Mr Huang to step down.
“The potential for extortion is so tremendous that something as sensitive as Nvidia chips, I just think he’s got to go,” Cramer told Politico on Tuesday.
The allegations have turned Mr Huang’s personal conduct into a broader risk for Nvidia, raising questions about the company’s governance and its dependence on the boss who has led it for more than three decades and built it into the dominant supplier of AI chips.
He owns about 3.6 per cent of the company - but does not have majority voting control - and runs an unusually flat organisation in which dozens of executives report directly to him.
Huang has told employees he was unfaithful to his wife, but provided no details about the relationship. China’s foreign ministry has said the spy accusations are “groundless”.
Huang apologised to top executives at a meeting on Monday before pivoting to business and was back holding meetings at Nvidia’s headquarters on Tuesday, CNBC reported.
Nvidia has said its board has no reason to believe US national security or company secrets were compromised and that Huang has committed to co-operating with the internal review.
Nvidia’s stock, which had been nearly flat this year before news of the affair broke, has fallen 9.5 per cent since then. The shares have lagged the broader market on investor unease over whether massive spending on AI will deliver adequate returns.
US Presidents’ prior briefings
The New York Times reported on Tuesday that Rubio had briefed Trump aboard Air Force One en route to China in May about US intelligence indicating Huang was involved with a woman believed to be a Chinese spy.
The briefing marked at least the second time in seven months that Trump had been told about the intelligence, the Times reported.
Trump said on Monday he had spoken with Mr Huang and asked whether he knew the woman was a spy. Trump said Mr Huang told him he had “absolutely no idea” and that he believed the Nvidia boss.
Trump also said he had not known about the alleged ties when Mr Huang accompanied him to China in May.
Schumer said on Tuesday that Congress must have a full accounting of Trump’s defence of Mr Huang and called on lawmakers to quickly approve new restrictions on US chip exports to China.
“He’s supposed to protect America, not China, not his friends,” Schumer said, accusing Trump of failing to address foreign espionage in the American technology industry.
