Nvidia's stock price fell by approximately $430 billion over two trading sessions. This occurred amid new reports that intensified questions regarding CEO Jensen Huang's ties to a Chinese businesswoman, who is allegedly considered a spy for Beijing.
The conflict escalated on Tuesday after allegations surfaced that Huang's relationship with Alice Huang facilitated the supply of at least $7.5 billion worth of Nvidia chips to China. It was also revealed that former US Secretary Marco Rubio had previously informed President Donald Trump about this romance.
Senate Democratic leader Chuck Schumer demanded clarification from the administration and pushed for stricter restrictions on chip exports to China, while the company's independent directors hired external lawyers to conduct an investigation.
Calls for resignation and governance concerns
Republican Senator Kevin Cramer, a member of the Senate Banking Committee, called for Huang to step down as CEO. Cramer stated in Politico late Tuesday: 'The potential for extortion is so enormous that, given something as sensitive as Nvidia chips, I just think he should go.'
These allegations have transformed Huang's personal conduct into a broader risk for Nvidia, raising questions about corporate governance and the company's dependence on its CEO, who has led it for over three decades and turned it into a leading supplier of AI chips. He owns about 3.6% of the company but does not control a majority of votes, and manages an unusually flat organization where dozens of executives report directly to him.
The FBI is separately investigating whether 63-year-old Huang was subject to foreign intelligence operations. Huang himself told employees he had been unfaithful to his wife but did not provide details about the relationship. The Chinese Ministry of Foreign Affairs stated that the espionage accusations are 'unfounded.'
As reported by CNBC, Huang apologized to senior management at a closed meeting on Monday, after which he returned to business, holding meetings at Nvidia's headquarters on Tuesday.
Nvidia stated that its board of directors does not believe that the security of U.S. national interests or company secrets were compromised, and that Huang agreed to cooperate with an internal review. The board hired Jun Kim, a partner at Wachtell Lipton and former U.S. Southern District Attorney, whose practice includes internal investigations and white-collar defense, to lead the inquiry.
Nvidia shares, which had remained nearly stable until this year, dropped 9.5% after the news of the romance broke. Shares are lagging the broader market due to investor concerns about whether massive investment in AI will yield adequate returns.
When did Trump find out?
The New York Times reported on Tuesday that Rubio informed Trump aboard 'Aeroflot One' en route to China in May about intelligence data suggesting Huang had connections with a woman believed to be a Chinese spy. According to The Times, this was at least the second notification Trump received about this intelligence in seven months.
Trump stated on Monday that he spoke with Huang and asked if he knew the woman was a spy. Trump reported that Huang replied that he 'knew absolutely nothing' and that he trusted the Nvidia CEO. He also noted that he was unaware of the alleged connections when Huang accompanied him on the trip to China in May. A White House spokesperson refuted this account.
Schumer stated on Tuesday that the U.S. Congress must receive full information regarding Trump's protection of Huang, and urged lawmakers to promptly approve new restrictions on American chip exports to China. Schumer accused Trump of being unable to counter foreign espionage in the American technology industry, stating: 'He should be protecting America, not China, not his friends.'
Who is Alice Huang?
The Information reported that Alice Huang, also known as Huang Le, along with her husband and sister, created a network of companies in China and Singapore to acquire Nvidia chips. When orders for Nvidia chips subject to U.S. export controls stalled, Alice Huang used her connections with Nvidia to ensure supplies, helping to deliver about 240,000 H100, H200, and some A100 chips to China. Some of these chips were eventually used by Alibaba, Tencent, and small Chinese AI laboratories.
Before becoming a controlling shareholder of the Singaporean cloud computing company Megaspeed International, she held senior positions at an investment firm in Shanghai. Megaspeed was linked to Century Litong, a Chinese company that became a preferred Nvidia cloud partner in 2023, granting it priority access to the company's chips.
Separately, the Financial Times reported on Tuesday that several U.S. government agencies insisted on including Megaspeed in the Entity List—a blacklist of trade groups associated with China that U.S. officials deem a threat to national security—but the U.S. Department of Commerce delayed these efforts. The FT reported that the department requested additional information about some of the companies under consideration. It was unclear whether Megaspeed was among these companies, but the delay resulted in it not being placed on the list.
