Nvidia's board opens an investigation into Jensen Huang over his ties to an alleged Chinese spy

Nvidia's board has opened an independent investigation into whether Jensen Huang, its co-founder and chief executive, was the target of a foreign intelligence effort. The board acted on Sunday 8 November, as Nvidia published a memo in which Huang told staff he had had an affair. Nvidia shares fell more than 4% in trading outside US hours on Monday.

The probe follows reporting by the New York Times that US intelligence officials believe Alice Huang, no relation, was recruited by China's Ministry of State Security. She is an executive at Megaspeed, a Singapore-based data-centre company and one of Nvidia's biggest customers in Southeast Asia. A committee of independent directors with outside counsel will run the inquiry. "While the Board has no reason to believe that either national security or NVIDIA secrets were compromised, the Board's inquiry will examine all available information," the board said, adding that it has confidence in Huang.

In his memo, which did not name the woman, Huang wrote: "I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did." He said he supports the review and remains "fully committed to NVIDIA". China's foreign ministry called the spy allegation "entirely baseless". Jeffrey Sonnenfeld of the Yale School of Management told TechCrunch that Huang's survival was "about a 50-50" proposition.

Traders are less pessimistic. They put the chance that Huang announces his resignation or is removed by 31 December at 15% (as of 9 November), on about $150,000 of trading. The bigger damage is to Nvidia's standing. The chance that it ends the year as the world's most valuable company has fallen to 22%, down 12 points in a day and 35 in a week, as the AI sell-off and now the probe have pushed it below Apple.

Apple is now the strong favourite: traders give it a 74% chance of being the largest company at the end of December, and 85% at the end of November.

Why it matters

• Stocks: A governance cloud now hangs over the market's AI bellwether in the week before its third-quarter results on 17 November, compounding a bruising AI sell-off. Asian suppliers shrugged it off on Monday, with TSMC up more than 6%.
• Politics: Three House Republican committee chairs want Huang at a closed-door briefing on 18 November, and Senator Chris Coons, the Democrat in line to chair the Senate Foreign Relations Committee from January, says Congress will investigate, which could put export controls on Nvidia chips back under scrutiny.
• Business: Huang holds no super-voting shares, so his future rests with an independent board whose findings now set the timetable.