Jen-Hsun “Jensen” Huang resigned yesterday morning as President and CEO of Nvidia, the computer chip manufacturer. In the last several days, the media have reported on an affair he had with a woman suspected of working for the Chinese Ministry of State Security (MSS is how one says KGB in Mandarin). After the initial stories broke, a second affair with an employee came to light. The board let him resign rather than fire him, but had he not, the vote would have been unanimous against him. The chip maker will have an interim leader in Colette Kress, who is currently the CFO of the firm. Turmoil is not what the AI market needed in one of its main suppliers, nor what the stock market needed from one of the sectors that was actually keeping the rest of the market afloat.
Mr. Huang’s position in the AI business is not unlike the job of the central bank in the economy. Where the Fed supplies money, Nvidia supplies chips. The more cash/chips in the market, the faster things move. If there is less cash, fewer chips, things move more slowly.
At the same time, Nvidia is a national security concern. AI is a serious realm of research for the military of both the US and the People’s Republic of China. While not as obviously lethal as nuclear weapons, military leaders are convinced that the race for AI is one that no nation can afford to lose and retain its security. Those same leaders also have an interest in keeping the money flowing in that direction, so a grain of salt is in order.
Mr. Huang fell into a classic “honey trap,” the term in espionage that describes using sex to gain leverage over a source. Mr. Huang is alleged to have had an affair with Alice Huang (no relation). The New York Post stated, “Sources from her home province of Hunan told the Post Huang was born in 1977, trained at a nursing school, worked at Hunan TV and state broadcaster CCTV, but mysteriously never held a staff job, and that she had been married in Hunan before she met Kang Wei, the stock analyst and investor who reportedly introduced her to Jensen Huang.”
The paper also said, “By 2023, Huang had a senior role at Megaspeed, a Singapore firm that went on to buy billions of dollars of Nvidia chips for data centers in Southeast Asia and the Middle East. Megaspeed has denied allegations it diverted restricted chips to China, but investigations into them doing so have been launched in the US and Singapore.”
In addition to Ms. Huang, Forbes magazine says “Now-former Nvidia CEO Jensen Huang had an extramarital affair with a second Nvidia employee, Reuters reported Thursday, further adding to the accusations against the tech giant after Huang’s affair with suspected Chinese spy Alice Huang and reports of a separate affair with Nvidia executive Kimberly Powell fueled the billionaire’s resignation from Nvidia.”
Business ethics rules are clear. A boss does not sleep with employees. It creates emotional dynamics that impede the flow of business at beset, and it can also be a situation in which the employee feels compelled to have the relationship. In the extreme, that is rape.
So, Mr. Huang will take his $150 billion fortune off into the sunset. Ms. Huang will remain in Beijing where she has been since the story broke. Nvidia will have to restructure while the US government investigates the damage that may have been done. If the allegations are true, this was a highly successful Chinese MSS operation. The FBI charged with counter-intelligence in the US is in the hands of Kash Patel, and most of his guys are busy investigating Democrats who annoy the president rather than real threats to national security. When the Trump administration comes to an end, it will prove necessary to rebuild that organization’s capacities as well.