Nvidia is facing mounting regulatory and corporate pressure after CEO Jensen Huang’s alleged indiscretion triggered congressional calls for his resignation, an impending board inquiry and a sharp decline in the company’s market value. Some Nvidia shareholders are also planning to file a lawsuit against Huang, alleging that his conduct contributed to the decline in the company’s stock value.
The chipmaker has reportedly lost more than US$ 200 billion in market capitalization as per a report by CNBC, in wake of reports of Huang’s alleged involvement with individuals linked to a suspected Chinese intelligence operation.
On Sunday, Nvidia’s Board of Directors issued a statement saying they would be “initiating an independent investigation in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort. A committee of independent directors, assisted by outside independent counsel, will oversee the investigation.” The review will also consider whether the circumstances involved any conflicts of interest under the company’s Code of Conduct. The Board said it would seek to establish the facts and ensure appropriate oversight.
Meanwhile, Huang has acknowledged an extramarital relationship with at least one woman, and expressed regret, issuing an apology without identifying the other party. The reports have also raised questions about whether any corporate or government information was involved.
Reuters reported that on Monday, Nvidia and Huang were sued “in a proposed class action accusing them of defrauding shareholders by concealing Huang’s ties with a suspected Chinese spy.” The publication cited a complaint filed in federal court in San Jose, California, that said that the defendants misled shareholders about Huang’s alleged indiscretion.
In Washington, lawmakers have called for Huang to step down, Republican Senator Kevin Cramer told CNBC, “As a matter of his own conscience, he should resign,” warning that the CEO could be vulnerable to “extortion, blackmail.”
Three Republican House committee chairs have requested Huang testify on November 18, and they have indicated that subpoenas remain an option if he declines. Democratic lawmakers have also called for his resignation and broader investigations into Nvidia’s dealings with China and the administration’s handling of intelligence concerns as reported by CNN.
The controversy comes as Congress considers tighter restrictions on advanced AI chip exports to China, an issue Huang has previously opposed. Lawmakers argue the allegations reinforce the need for legislation limiting China’s access to US semiconductor technology.
The company’s exposure extends beyond its share price. As a leading supplier of AI chips, Nvidia’s relationships with US policymakers and its ability to navigate export controls are central to its business. Prolonged scrutiny could complicate its dealings with Washington and increase regulatory uncertainty at a critical time for the global AI industry.