SACHA PFEIFFER, HOST:
Shares in the chipmaker NVIDIA tumbled today. That's because the $4.3 trillion company said it is investigating its CEO, and that is due to allegations that he had a relationship with a woman suspected by U.S. intelligence of being a Chinese spy. NPR tech correspondent John Ruwitch is here to bring us up to speed. Hi, John.
JOHN RUWITCH, BYLINE: Hey, Sacha.
PFEIFFER: Tell us more about these accusations.
RUWITCH: Yeah. Yesterday, NVIDIA posted two announcements online. One said the board was investigating CEO Jensen Huang after reports that he was, quote, "the target of a foreign intelligence effort." The other was a memo from Huang himself admitting to having an affair and saying that he'd cooperate with the investigation. Now, The New York Times and others have been reporting that U.S. intelligence agencies believe that Huang became involved with a Chinese woman at a Singapore-based company called Megaspeed. That company was a customer buying NVIDIA chips.
Those reports, which NPR has not independently corroborated, said the woman was recruited by China's Ministry of State Security to spy on Huang or possibly try to influence U.S. policy. The New York Times has reported that Megaspeed was being investigated by the government for circumventing U.S. export controls and helping Chinese tech companies get access to restricted chips. I reached out to Megaspeed and haven't heard back, but the company has previously denied wrongdoing.
PFEIFFER: John, as you know, China spying on foreign companies is not uncommon. So explain why this one is so headline-grabbing.
RUWITCH: Yeah. I covered China for a number of years, and foreign businesses in China were constantly complaining about the government trying to hack or spy on them to learn their corporate secrets. But NVIDIA is really in a league of its own in terms of its importance. You know, the chips that NVIDIA makes are crucial to the AI boom. The company's also entangled in a web of investments with other AI companies. So for example, NVIDIA has invested in OpenAI and Anthropic, and in turn, those companies are buying chips from NVIDIA.
NVIDIA and its chips are also right at the center of the AI competition between the U.S. and China. The U.S. banned NVIDIA's best chips from being sold there out of a concern that they could be used to help China's AI industry catch up with the U.S. But Jensen Huang, the CEO, has been one of the most prominent voices arguing against that ban. He says it would be actually good for the U.S. if Chinese companies were hooked on American chips.
PFEIFFER: And the company now has to decide what to do about this and what to do about him, whether maybe to dismiss him. I mean, give us a sense of how important he is to this company.
RUWITCH: Yeah. I asked Daniel Newman about this. He's CEO at Futurum Group, a tech research firm.
DANIEL NEWMAN: He is the company.
RUWITCH: He is the company. Jensen Huang founded it. He turned it into the juggernaut that it is today. But he runs that company in a way that Newman described as autocratic. He's the face of the company. He makes all the big decisions, and there aren't many layers of bosses between him and everybody else. And Newman says it's unclear if much thought has gone into a post-Jensen NVIDIA until now.
NEWMAN: You can be absolutely sure that a succession plan is now being drawn up, that there are much crisper and congruent thinking about putting a succession in place, having something to announce to their board, to their investors, to their ecosystems, to their partners.
RUWITCH: Now, I reached out to NVIDIA for a comment today. I haven't heard back, but one of the statements they posted on Sunday said the board has confidence in Jensen and his leadership team.
PFEIFFER: And John, how do you expect this to unfold in terms of what comes next?
RUWITCH: Well, NVIDIA's share price may be in for a bit of a rocky ride, but from a business perspective, the company's in a pretty strong position. I mean, its microchips are the gold standard. Many companies are dependent on them. And demand is expected to remain strong for those chips for some time to come. I think we can expect scrutiny from Congress on this. You know, Jensen Huang's already been summoned by three House committees to brief them on the matter.
One of the big questions to watch is going to be what the government knew and when. That's because some of the reporting around this says intelligence agencies told senior officials, including President Trump, about this a year or so ago. And then President Trump's going to China next week for an Asia-Pacific summit where he's going to have talks with Chinese leader Xi Jinping. So it'll be interesting to see how this all plays out there.
PFEIFFER: That is NPR's John Ruwitch. Thank you.
RUWITCH: You're welcome. Transcript provided by NPR, Copyright NPR.
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