NVIDIA Reportedly Prepares to Remove CEO Jensen Huang; Stock Falls 8%

Update (Nov 12, 14:38 UTC): NVIDIA confirmed on Nov. 12 that Jensen Huang resigned as president, CEO and director effective immediately; its Form 8-K says the board accepted the resignation on Nov. 11. CFO Colette Kress is interim CEO, and Harvey C. Jones was named the board's first Chair. Full story: /story/jensen-huang-resigns-as-nvidia-ceo-colette-kress-interim-ceo

NVIDIA's board is preparing to remove CEO Jensen Huang, The Wall Street Journal reported on Nov. 11, and NVIDIA shares fell more than 8% to $159.51 in after-hours trading, CBS News reported. Bloomberg separately reported that NVIDIA is working with an outside firm to identify CEO candidates. NVIDIA has not announced any change.

The Journal's report, relayed by CNBC, said the board could meet as soon as Wednesday to decide Huang's future. CNBC put the after-hours drop at more than 9%, after a regular session in which the stock closed up 2.87% at $173.73. The company's market value has fallen by more than $450 billion since it announced the probe into Huang's conduct on Nov. 8, according to CBS News. As Voltgrid reported, the board opened that independent investigation on Nov. 8 and said it had confidence in Huang, and our Nov. 12 story covers the House briefing request he had not answered by its deadline.

Neither report says the board has reached a decision, and both rest on people familiar with the matter. Bloomberg's report is behind a paywall, and the outside firm has not been named.

Why it matters for chip supply

Fortune describes a company built around one decision-maker: Huang has about 60 direct reports, the board has no chair, there is no chief operating officer and no clear succession plan. D.A. Davidson analyst Gil Luria told Fortune the factors behind a possible removal "hasten a transition the company is not prepared for." The practical question for customers is whether any leadership team can inherit his authority over what gets built and which commitments the company makes.

Demand is not the worry analysts cite. Jay Goldberg of Seaport Research Partners told Fortune that NVIDIA is sold out and contracted into next year, though he said a leadership change would cost it luster and raise the odds of a misstep. NVIDIA had guided fiscal third-quarter revenue to $108 billion, plus or minus 2%, Fortune noted, and it reports those results on Nov. 17.

Memory suppliers watch closely

Samsung Electronics and SK hynix are key memory suppliers to NVIDIA, and SK hynix has an especially close partnership, according to The Korea Times. Korean industry officials told the paper they expect limited short-term impact, but one said a CEO change would "inevitably" be felt by Korean companies, given how much Huang's personal ties drive the relationships. NVIDIA declined to comment on whether the affair could affect its high-bandwidth memory (HBM) partnerships. Samsung held 38% of third-quarter DRAM revenue and SK hynix 29%, according to Counterpoint, so both have volume tied to NVIDIA's roadmap.

What is not confirmed yet

NVIDIA has not confirmed a search, an interim role or any board decision, and the latest 8-K on its SEC filing list, as of this writing, is dated Sept. 3. No candidate has been named in the reports. Fortune reports that outside experts have floated CFO Colette Kress or lead independent director Stephen Neal as interim options, but that is commentary, not a board plan. The after-hours figures differ between outlets because they were taken at different times. Watch for an 8-K, any statement from the board, the Nov. 17 results and the Nov. 18 House briefing.