Nvidia Scandal Echoes at Seoul as Korea’s Mega Companies Worry About Constraints on Importing Advanced Chips

The uproar over Nvidia CEO Jensen Huang’s affair with a suspected Chinese Communist espionage agent is spreading alarm among the enormous South Korean conglomerates with which the world’s largest tech giant has formed close and seemingly endurable ties.A sure sign of the embarrassment if not the financial impact of the scandal was the absence of Mr. Huang’s 35-year-old daughter, Madison Huang, Nvidia’s senior director of product marketing, at a “NVidia AI Day in Seoul” at which NVidia executives talked over plans and products with some of their hugest customers, notably Samsung Electronics, Korea’s biggest chip maker, and second-ranked SK Hynix.Ms. Huang, whose husband, Nico Caprez, a former member of the Swiss Alpine ski team, now NVidia’s vice president of Global AI Growth, had an unassailably sensible excuse for skipping an occasion at which South Korea’s mightiest tycoons were waiting to see her. “Family reasons,” South Korea’s Yonhap News reported as the reason for her absence at the confab Monday.As it was, the event went off as planned with visitors looking at displays of electronic wizardry and reading and hearing explanations of Nvidia’s success in making AI a global phenomenon.In the midst of the blitz of publicity, Nvidia declined to comment, according to Yonhap, on whether the scandal, including upcoming congressional hearings, :could affect the delivery of 260,000 graphic processing units pledged to South Korea or partnerships with Korean chipmakers, but a South Korean official was confident there would be no disruption.There was no doubt, though, that the scandal was interrupting the close ties that Mr. Huang had been fostering with the leaders of South Korea’s mightiest chaebol, or clonglmerartes, including Samsung Electronics Chairman Lee Jae-0yong, Hyundai Motor’s chairman Chung Euisun, and SK Chairman Chey-won. Mr. Huang has met all three of them this year and met South Korea’s President Lee Jae-myung at the AI summit in San Francisco in July.Now, as Mr. Huang faces investigation by his own company as well as congressional committees, South Korean executives worry over whether they will be able to import the same most critical AI chips that are banned for export to China.The fear is that Washington will want to ban some of them from export to South Korea and other markets while investigating the links between the Singapore company, Megaspeed, for which Mr. Huang’s friend, Alice Huang, no relation, was working. As an executive, she allegedly had the power to ship the most sensitive AI chips to China and also to provide intelligence information to her Chinese friends and contacts.At the least, the drama of sex and espionage is a global distraction for Nvidia, the company that Mr. Huang founded in 1993 at a Denny’s restaurant in San Jose when he was 30 years old.The ruckus is exploding in Washington, where the treasury secretary, Scott Bessent, at a White House meeting, reportedly asked the commerce secretary, Howard Lutnick, why there had been a delay in banning export of super-advanced chips to Megaspeed. Axios reported Mr. Lutnick as lamely responding, “I don’t know, I’ll look into it.”South Koreans appear just as upset by Americans about the revelations and implications. “Clash Follows Reports Megaspeed, Linked to NVIDIA CEO’s Scandal, Purchased $4.8 Billion in Restricted AI Equipment Despite Export Bans,” headlined Korea’s biggest-selling newspaper, Chosun Ilbo.Mr. Huang faces a showdown on two fronts, with his own board of directors and at the hands of congressional committees, which are asking him to appear for closed-door hearings. It’s still not clear whether he will agree voluntarily to explain himself and Nvidia’s activities or will have to answer a subpoena, and it’s also far from clear whether he will fight to retain his position in the company of which he is a co-founder or whether he will simply resign rather than face dismissal.The Associated Press quoted Senator Elizabeth Warren as saying the relationship between Mr. Huang and Ms. Huang “raises important questions NVIDIA must answer about the extent to which these activities were related.”

Nvidia Scandal Echoes at Seoul as Korea’s Mega Companies Worry About Constraints on Importing Advanced Chips

Nvidia Scandal Echoes at Seoul as Korea’s Mega Companies Worry About Constraints on Importing Advanced Chips

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