Nvidia has no succession plan as Huang's future rests with its board

Nvidia sells off alone as wider market takes a wait-and-see stance

NPR host Sacha Pfeiffer opened the interview by laying out the background. Huang is the CEO of an American technology giant, and the woman was a Chinese executive at a firm in Singapore; their liaison, Pfeiffer said, “could cost him everything.” Huang’s company, Nvidia, creates many of the world’s most powerful computer chips. U.S. intelligence agencies believe the Chinese businesswoman was a spy for China, and China denies that. But Huang did admit to the affair on Sunday, Pfeiffer said, and Nvidia has lost hundreds of billions of dollars in market value in the last two days.

Pfeiffer said 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. She asked King why that mattered for what otherwise might be a simple corporate affair scandal story.

King said that was exactly the right question. “Jensen Huang is the only CEO that NVIDIA has ever had,” he said. Huang is absolutely central to how the company acts, its strategy and everything else, and Nvidia has a unique corporate structure, King said. If that were all, it would be of note to Nvidia’s investors, of whom there are a lot, he said. Even more than that, Huang has been the cheerleader for U.S. efforts to promote artificial intelligence and to try to propagate the industry throughout the world, King said, and he has pledged tens of billions of dollars in investments to fund other companies’ efforts to get up to speed and move that forward.

Pfeiffer asked whether Huang is a distinctive chief executive compared with other technology CEOs. King said he is distinctive in many ways, and that the most important thing is that the company was built around him. His staff are absolutely devoted to him and cannot answer questions without referring to what he says, King said. His office is not an office but essentially a small auditorium where the people who report to him sit and face his scrutiny, King said. He can be very harsh and he can also be very supportive; he never fires people; and he deals with customers and with government relations. “The front man, he’s the head — he’s everything and consciously so for this company,” King said.

Pfeiffer described Huang as the opposite of a hands-off manager, down on the floor with the worker bees and across all aspects of the company. King agreed. “He acts like he owns it, and the people who work for him act like he owns the company,” he said. That is the bottom line even though it is not true, he said, and even though Nvidia is a $4 trillion company. Huang has nothing in the way of a succession plan that would lead anyone to believe a transition could unfold the way it did at Microsoft, when Bill Gates left and Steve Ballmer stepped up and everything was fine. “That’s just not the way NVIDIA is run and the way NVIDIA is structured,” King said.

Pfeiffer asked whether the absence of a succession plan was a failing on Nvidia’s part. King said Huang has argued that he did it on purpose, building the company around himself because he wanted it to be flexible. Huang did not want a normal corporate structure with a pipeline of career executives coming through and the politics that come with it, King said; he wants no silos, with everybody able to charge in a completely different direction as soon as possible. The way Huang saw to facilitate that was to have a pyramid — himself and then everybody else, King said. If he is not there, there is no capstone to that pyramid, which King said is not a good thing.

Pfeiffer asked whether that could mean the company is reluctant to remove Huang for fear of destabilizing the company and destabilizing markets. King said his reporting has already shown that Nvidia’s board — which will ultimately be the arbiter of what happens — does not want Huang to leave. He pointed to 7,000% gains in the stock market over recent years and to any number of other metrics he described as absolutely unprecedented, many of them associated with Huang for as long as 30 years. “So absolutely the bias is to keep him,” King said. What will come out of the investigations — whether Huang compromised the company’s position, whether he was a threat to national security — will determine whether the board is able to keep him, King said.

Pfeiffer noted that Nvidia’s stock has been hammered and asked whether the damage could become infectious for other AI companies or remain specific to Nvidia. King said it is a mixture of both. He and his colleagues expected on Monday that the whole market might be pulled down because of Nvidia’s central role, he said, but that did not happen: it was only Nvidia that fell. Nvidia was falling again while other stocks continued to go up, King said, and at the moment the market is playing a wait-and-see kind of game. There is concern on the fundamentals, he said, because Nvidia has such a systemic role in the money it provides to other companies to help their efforts to get into the game, and because of the role Huang himself has played as a cheerleader for the technology.

Pfeiffer asked about the potential ramifications beyond Nvidia, for the United States and elsewhere. King said there are a number of ramifications on the broader economic push. Nvidia is the absolute leader worldwide and is the U.S.’s jewel as a technology company, he said, in asserting leadership of a technology that he thinks is only going to become more important and that has strategic importance. If the company were to stumble under somebody else’s leadership, King said, a lot would be at stake.

Pfeiffer asked whether people who think the AI industry has too much power and is not regulated enough might be cheering what is happening at Nvidia. King said whether they are cheering is another matter, but that prominent people inside the industry have said the industry should perhaps slow down and that it might be getting out of control. Huang has been the key voice saying the industry should not believe that, that it should go even faster and use AI to make AI safe, King said. Absent Huang from the conversation, he said, the weight goes to the other side of the balance, and those who are concerned may have a greater voice and a greater say.

The board, which King described as the ultimate arbiter, will decide what happens to Huang. The investigations will determine whether he compromised the company’s position or represented a national-security threat, and whether the board is able to keep him. Until those questions are resolved, the market is watching a $4 trillion company whose strategy, public voice and structure remain unusually concentrated in one chief executive, as King described them.