SACHA PFEIFFER, HOST:
He is the CEO of an American tech giant. She was a Chinese executive at a firm in Singapore. And their liaison could cost him everything. That sounds like a soap opera, and yet it is a thing that has actually happened to Jensen Huang, whose company, NVIDIA, creates many of the world's most powerful computer chips. U.S. intelligence agencies believe the Chinese businesswoman was actually a spy for China. China denies that. But on Sunday, Jensen Huang did admit to the affair, and NVIDIA has lost hundreds of billions of dollars in market value in the last two days. How important is Jensen Huang to NVIDIA, and how important is NVIDIA to the U.S. economy? Those are two of the questions I'm going to put to Ian King. He's been writing about this story for Bloomberg. Ian, welcome.
IAN KING: Hello.
PFEIFFER: Ian, anyone who follows the stock market knows that a company like NVIDIA has been underpinning the U.S. economy enormously through its dominant role in U.S. financial markets. Tell us why that matters when we talk about this what otherwise might be a sort of simple corporate affair scandal story.
KING: No, that's exactly the right question. Jensen Huang is the only CEO that NVIDIA has ever had. He is absolutely central to how it acts, its strategy and everything else, that he has a unique corporate structure (ph). If it was only that, that would be of note to NVIDIA investors, and there are a lot of them. But even more than that, he has been the cheerleader for the U.S.'s efforts to promote artificial intelligence and to try to propagate that industry throughout the world. And in addition to that, he has pledged literally tens of billions of dollars in investments to fund other companies' efforts to get up to speed and to move that all forward.
PFEIFFER: Do you consider him a different type of CEO than other tech CEOs? Is he distinctive in some way?
KING: He's distinctive in many ways. The most important thing is that this company was built around him. His staff are absolutely devoted to him. They can't answer questions without referring to what he says. He sits in a room. His office isn't an office. It's essentially a small auditorium where the people that report to him sit and face his scrutiny. He can be very harsh. He can also be very supportive. He never fires people. He deals with customers. He deals with the government relations. The front man, he's the head - he's everything and consciously so for this company.
PFEIFFER: He's the opposite of a hands-off manager. He's down there on the floor with the worker bees. He kind of gets all aspects of the company?
KING: He acts like he owns it, and the people who work for him act like he owns the company. That's the bottom line, despite the fact that that's not true, despite the fact that it's a $4 trillion company. He hasn't got anything in the way of a succession plan that would lead you to believe, well, OK, maybe in the case of Microsoft, when Bill Gates leaves, Steve Ballmer steps up and everything's OK. That's just not the way NVIDIA is run and the way NVIDIA is structured.
PFEIFFER: Was that a failing on NVIDIA's part, not to have a succession plan?
KING: Jensen argued that he did it on purpose, that he built the company around himself, that he wanted the company to be flexible. He didn't want a normal corporate structure with this kind of pipeline of career executives coming through and there being politics. He wants no silos. He wants everybody to be able to charge in a completely different direction as soon as possible. And the way that he saw to facilitate that was to have this pyramid - right? - him and then everybody else. Obviously, if he's not there, then there's no capstone to that pyramid, and that's not a good thing.
PFEIFFER: Could that mean that as the company tries to decide what to do with him or what to do about him, they're reluctant to remove him because it could destabilize the company and destabilize markets?
KING: Our reporting has already showed that his board - and they'll be the arbiters of what happens here, ultimately - do not want him to leave. You know, 7,000% gains in the stock market over recent years - I mean, there's any number of metrics that you can point to that are just absolutely unprecedented. Many of them have been with him as long as 30 years. So absolutely the bias is to keep him. However, what will come out in terms of these investigations, whether he compromised the company's position, whether he was a threat to national security, all of those things will determine whether they are able to keep him or not.
PFEIFFER: As we mentioned, NVIDIA stock has really been hammered by this. Is there any reason to believe this could become infectious and affect the stocks of other AI companies? Or is this so - is this very specific to NVIDIA and unlikely to affect the larger market?
KING: It's a mixture of both. We expected on Monday that the whole market might be pulled down by this because of NVIDIA's central role. That didn't happen. It was only NVIDIA that fell. And NVIDIA is falling again today while other stocks are continuing to go up. And so, at the moment, the market is playing a wait-and-see kind of game. And obviously, there is concern, though, on the fundamentals because NVIDIA has such a systemic role to play here in terms of the money that it provides to other companies to help their efforts to get into the game and also the role that Jensen himself has played as a cheerleader for this technology.
PFEIFFER: So if his job is at risk or if he has put his company at risk, why does that matter beyond NVIDIA? What are the potential ramifications for the U.S. and elsewhere?
KING: Well, there are a number of ramifications on the broader economic push. NVIDIA is the absolute leader worldwide. It's the U.S.'s kind of jewel in terms of a technology company, in terms of asserting leadership of a technology that we think is only going to become more important, has strategic importance. If that company were to stumble under somebody else's leadership, then a lot would be at stake.
PFEIFFER: For people who think that the artificial intelligence industry has too much power and is not regulated enough, could they be cheering what's happening now at NVIDIA?
KING: Whether they're cheering or not is another matter, but again, that's a very good question because the industry itself - prominent people inside the industry have said, hey, maybe we should slow down. This might be getting out of control. Jensen has been the key voice that said, we shouldn't believe that. We should go even faster, and we should use AI to make AI safe. So absent him from the conversation, then the weight goes on the other side of the balance on that, and those that are concerned may have a greater voice and a greater say.
PFEIFFER: That is Ian King. He's a technology reporter for Bloomberg. Ian, thank you.
KING: Thank you very much. Transcript provided by NPR, Copyright NPR.
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