Nvidia's Jensen Huang has resigned as CEO of the company, following the revelation of his affair with a woman suspected of being a Chinese spy and reports of a relationhip another woman who was a company employee.

In a Form 8-K [PDF] filed with the US Securities and Exchange Commission (SEC), the GPU maker disclosed that it accepted the resignation of Huang, whom it identified as Jen-Hsun Huang, on November 11, effective immediately.

He is being replaced by chief financial officer Colette Kress, who will serve as interim leader while the board conducts a search for a new CEO.

Huang, who founded Nvidia in 1993 and served as president, CEO, and a member of the board of directors ever since, led the GPU maker to become one of the most valuable companies in the world, hitting a hit peak of over $5.5 trillion earlier this year.

His position became untenable following an investigation by the company's board after he admitted to an affair, amid allegations he had a romantic relationship with a woman the US authorities suspected as a Chinese spy.

Reports later surfaced this week of a second alleged affair with an employee of the company itself, reported by the New York Times as being with Kimberly Powell, Nvidia's vice president of health care.

A two-week downfall

News of the scandal first broke barely a couple of weeks ago, on October 29, when claims surfaced that Huang had been the target of an espionage plot involving a Chinese businesswoman working for a Singapore-based company called Megaspeed which was a customer of Nvidia.

According to the New York Times, US intelligence had reason to believe the woman, Alice Huang, was recruited to gather information about Nvidia and its operations for the Beijing government. Megaspeed also faces claims it was illicitly shipping Nvidia products to China, in violation of US export controls.

Any relationship between Huang and a Chinese operative would be enormously concerning, as the US has been trying to keep advanced technology for AI out of the hands of the country, allegedly for security reasons, fearing it might be used for military purposes.

For its part, Beijing rejects the spying allegations, saying they are part of a smear campaign against China.

Shortly after Nvidia’s board announced it was investigating Huang, he sent an email to Nvidia staff apologizing and confessing to having an affair, though he did not explicitly name Alice Huang in his public apology.

It seemed like the leather-jacketed leader might just hang on, since it was difficult to imagine anyone other than him leading the company after all this time. But Nvidia’s shares fell 4.3 percent on November 9 and a further 5.5 percent the following day, wiping around $430 billion off its market value, amid all the speculation.

Then the claim emerged regarding a second affair, with an employee at Nvidia who reported to him, and many commentators took it as a sign the game was up. Huang resigned the same day the news broke.

Indecision ahead

Now the speculation starts over who will take over the reins at Nvidia, but Huang could prove a tough act to follow. He is said to have recognized early on the potential for taking the number-crunching capabilities of graphics processors and putting them to use at accelerating AI processing, and Nvidia’s position today as the leading AI hardware firm is thanks to that bet.

“The sudden resignation of Jensen Huang is about more than succession at the world’s most important AI chipmaker, Nvidia’s leadership crisis is a stress test for the AI boom,” says Forrester VP and group research director Stephanie Balaouras.

If Nvidia stabilizes quickly under new leadership, the AI infrastructure boom will have demonstrated resilience, she adds. But if its stock or financing relationships remain under sustained pressure, that would add evidence to the fragility of the AI bubble.

“In the near term, the board did the sensible thing and reached for a steward. Colette Kress knows every number in that order book,” commented Mark Malek, CIO at financial services firm Siebert Financial.

“It does NOT settle the stock. Interim means the real decision is still ahead, the investigations are still open, and next week’s earnings call just became the most important in the company’s history,” he added. ®