Nvidia CEO resigns after reports of second affair

SPEAKER_1 (0:00)

The Hard Shoulder, with Ciara Kelly and Shane Colman. On Newstalk, with Ciara.

Ciara Kelly (0:08)

Now, Nvidia CEO Jensen Huang has resigned after reports that he had a second extramarital affair and it emerged last night. And joining us with the latest on this is technology journalist Emmet Ryan. Good evening to you, Emmet. Can you remind people of why he has been, I suppose, in the news headlines anyway and tell us this latest update on what's happening?

Emmet Ryan (0:31)

Yeah, so Jensen Huang was until very recently, a few hours ago, really, the CEO of one of the most valuable companies in the world, Nvidia, who basically make all the chips that all the AI companies need to be able to build all their stuff. So it's a company that's critical to this entire AI boom that we've had over the last three years. And it's been very profitable to Huang himself. So his company is worth about 10 times what it was three years ago, which just for context, like Nvidia was a chip maker, but it was just a chip maker, wasn't that big a deal. Then it became the chip maker, so to speak, as the AI boom happened. But Huang himself has gotten to trouble. Essentially, the first part was when it was really an affair with a woman who turned out to be a Chinese spy.

And then it has since emerged, he also had an affair with an executive of Nvidia. So that second sort of bombshell coming to hit him has basically meant that the board saw and received his resignation like he has been ousted. And it sort of created this huge, huge hole at the top of the company, though, because the way the company was structured, there wasn't an obvious leader to replace him. The CFO was taken over in the interim. But the way it was described, there was 90 people who were direct reports to him, which basically meant that he had a huge amount of oversight over a broad range of people and obviously huge influence across broad ranges of the organization. There wasn't really any sort of delegation that you'd expect at this stage of a company.

You know, if you're Mark Zuckerberg, it would be a lot fewer than 90 people reporting you, for example. So it's put them in a huge hole, and obviously they've taken quite a hit on their stock as a result.

Ciara Kelly (2:10)

Yeah, I mean, he was one of the co-founders, wasn't he? And he's one of the champions of AI and indeed one of the single biggest investors in Nvidia. What happens now in the vacuum that he has left?

Emmet Ryan (2:22)

Well, that's a big question. So interim CEO is their current CFO, which very much just reads like, we've got to do something to tread water here until we work out what we're going to do, because I get the impression they don't know what they're going to do. Donald Trump has suggested that Tim Cook take the job. I don't think that'll be happening, just to be clear.

But that was what the US President decided it would be a good idea. But it is a huge leadership vacuum, and that's a problem with a lot of these personality driven companies at the top, Ciara, where it's driven so much by one personality. What do you do when the boss goes, whether it's willing or otherwise? And this is obviously otherwise, putting a mile.

Ciara Kelly (3:00)

Yeah.

Chief Financial Officer Colette Cress is going to take over as interim CEO, and they are obviously going to look for a permanent one. Huang has also been removed from the board as well. So a complete sort of ousting of him in general, probably other than his actual shareholding.

What does it mean for the market in terms of chips? I mean, Nvidia came to kind of outpace everyone, left people like Intel in the dust, although they have rallied. But what will it mean now? Do we know the impact that this is going to have, first of all, on the chip market, or indeed on the financial markets?

Emmet Ryan (3:35)

Well, it's a big hit to the financial markets because it's a hit to the chip markets, essentially, because so much trust is placed in this one person, which probably wasn't wise to begin with, let's not dance around that. But essentially, with Nvidia, they are crucial to think of any AI company you know, but not just the AI ones, the companies you associate with tech in general, your Googles, your Microsofts, et cetera, they're all buying chips from Nvidia to build all their various AI tools, AI stacks. And essentially now, it's been shown that the boss wasn't really minding what he was doing. Like bear in mind, Huang is originally Taiwanese, he would have been a particularly vulnerable target for the Chinese to go after, because typically China's relationship with Taiwan isn't the best. So Huang should have been more aware, he'd be more prone to being targeted with a honey trap type spy operation and still that didn't stop him from getting caught out with it. So it does show a real lack of foresight in his part.