Jensen Huang resigns as Nvidia CEO after affairs and spy scandal

Jensen Huang, the CEO of Nvidia, has stepped down from his position following several incidents. Colette Kress, the CFO, is acting as the interim CEO. The board of directors is searching for a permanent replacement. The events surrounding Huang's affair with a possible Chinese spy led to his immediate resignation. This was announced by the American company on Thursday morning (local time).

Until now, CFO Colette Kress has been taking over Huang's position while the board seeks a long-term successor. Nvidia also appointed its first-ever board chair, Harvey Jones, a tech investor who has been a member of the Nvidia board since the company's inception in 1993. This move seems to be a response to the recent criticism of the company's corporate governance.

The decision came after a crisis meeting of the board on Wednesday. It was reported by the New York Times that Huang also had a relationship with a manager directly reporting to him, which violated the company's internal rules; such relationships are generally not tolerated in many American companies due to the potential for serious conflicts of interest.

Major companies like McDonald's and Intel have previously removed their CEOs due to similar situations. Just a few hours later on Wednesday evening, the Wall Street Journal reported, based on internal sources, that the Nvidia board wanted to dismiss the founder and long-time CEO. Nvidia's shares lost up to ten percent of their value immediately after Huang's resignation was announced.

Related to Huang's alleged affair with a female employee, there are concerns that this was not an isolated case. Huang had recently admitted to having an affair with a manager at a Singaporean company. US intelligence agencies suspect that this woman, known as Alice Huang or Huang Le, is a Chinese spy. Huang's former employer, Megaspeed, is also suspected of providing access to Nvidia's latest chips to Chinese companies, despite US restrictions on exporting these products to China.

Huang had always opposed stringent export restrictions on China. Nvidia launched an external investigation on the weekend to investigate Huang's behavior in this affair, with US intelligence agencies also monitoring the case. Some Democratic lawmakers are demanding that Congress investigate Huang's affair and his close communication with the White House under President Donald Trump.

If Huang had remained at Nvidia, these investigations would have been focused on the company. Most corporate analysts and observers have been cautious about demands for Huang's removal. However, all agreed that Huang made very poor judgments by entering into this extramarital relationship. Investors reacted negatively to the news on Wednesday evening, especially to the Wall Street Journal report about Huang's possible dismissal.

Nvidia's shares fell by over eight percent in after-hours trading, while those of competitors AMD and Broadcom rose. This trend continued on Thursday when trading began in New York. The opening of the Nvidia title initially fell more than ten percent in the negative before it slightly recovered. The resignation of Jensen Huang has the potential to throw the AI industry into a new crisis.

This is due to Huang's central role in the company and the AI industry. He co-founded the chip developer 33 years ago and turned it into one of the world's most valuable companies. Nvidia dominates the market for specialized semiconductors that make the efficient training and operation of the latest AI language models possible. Huang led the company with a flat hierarchy that was heavily focused on himself; around 60 people are said to report directly to him.

Colette Kress will not be able to continue this system in the same way as she has been Nvidia's CFO for 13 years and has a good understanding of the company's activities. Kress has always been present at the quarterly earnings presentations alongside Huang, providing financial data and background information when analysts asked technical questions.

Huang provided the sharp quotes and the big assessments of how the AI industry as a whole would develop. Despite the current strong reaction of the stock market to Huang's dismissal, Nvidia still has a dominant position in the market and is very profitable. This strength will not disappear overnight. Kress is likely to be the right person to stabilize Nvidia after these current upheavals.

Before, the 59-year-old had made a career in finance at Microsoft, Cisco, and Texas Instruments, not in product development. She understands the complicated and long-term financing agreements with other AI companies that Nvidia has.