Nvidia Partners See Early Signs Customers Are Unnerved By Jensen Huang Investigation

Solution providers who are worried about how Jensen Huang’s relationship with an alleged Chinese spy could have made the CEO and, in turn, Nvidia vulnerable say some customers feel uneasy about the ordeal’s implications.

Nvidia channel partners are seeing the first indicators that customers are rattled by the Sunday announcement that Nvidia’s board will investigate CEO Jensen Huang’s relationship with a tech executive reportedly believed by U.S. officials to be a Chinese spy.

Some channel partners worried about how such a relationship could have made Huang and, in turn, Nvidia vulnerable said they had already heard from a few customers who feel uneasy about the ordeal’s implications and at least one customer who is putting the brakes on a purchase.

One U.S. systems integration partner CEO said his company received an email from an enterprise customer Monday morning about its intention to pause a purchase of Nvidia-based servers for a “decent-sized” proof of concept.

The customer, which has not yet invested in GPU-accelerated servers and works in a highly regulated industry, wants to see how the investigation plays out due to security concerns, said the systems integrator CEO.

“They didn’t want to make an investment if there was an investigation [and it] came back with an outcome of something not good for Nvidia or them,” he said, adding that he considers the customer to be a “very conservative company.” “They want to stay as compliant as possible.”

While the systems integrator CEO—whose company has made a “significant” investment in the AI infrastructure giant—believes Nvidia will ultimately weather the storm, he thinks the vendor is nevertheless entering a period full of unknowns.

“Everybody’s invested. They can’t just shift. There’s no [alternative]. AMD’s not there. Intel’s not there. The ship will keep going, but people want to be very cautious,” he said.

The U.S. executives at channel partner companies, all of which belong to the Nvidia Partner Network, spoke with CRN on the condition of remaining anonymous due to their close ties with the GPU provider and the sensitivity of the issue.

The CEO of a second Nvidia channel partner told CRN that the situation has shaken his trust in the vendor’s leadership as it prompted three of his major customers to request calls on Monday to discuss security concerns related to Huang’s entanglement with the alleged spy.

“You are one of the richest men in the world and one of the most powerful as it relates to technology, and the fact that you were swayed by an individual who turns out potentially to be a spy for China is unacceptable—and that has to have repercussions,” said the solution provider CEO, who is a longtime Nvidia advocate and holds stock in the company.

The solution provider CEO said his fears stem from the potential access the alleged spy had to Huang’s personal devices and how that could compromise Nvidia’s IT systems. This concern was brought up by Bill Bishop, a former U.S. media executive who previously lived in China and writes a widely read newsletter about the country.

The solution provider CEO sees the issue as critical, especially because of the U.S. government customers that have bought Nvidia-based systems from his company.

“What they need to do, especially for the partners that support government agencies and systems integrators, is they need to come out with a definitive statement that nothing that they have or we have deployed, whether from a software or a hardware perspective, is vulnerable or is at risk. That has to happen,” he said.

A director-level employee at a third Nvidia channel partner with a U.S. presence also shared security concerns, saying the episode should be a wake-up call for any company that plays a role in scaling up AI systems.

“They’re all probably going to be targets because of the implications of what access could get someone like North Korea or Russia or any other [nation-state],” he said.

How The Issue Has Played Out So Far

The statement by Nvidia’s board of directors, which coincided with the release of an email from Huang apologizing for being “unfaithful” to his wife, came after multiple news reports over the past two weeks cited concerns by U.S. intelligence officials about Huang’s close relationship with Alice Huang (no relation), a former executive at Singapore-based Megaspeed.

The issue is that U.S. intelligence officials reportedly believe Alice Huang has been recruited by China’s top spy agency, which the country’s government has denied. At the same time, her former company, Megaspeed, has reportedly been under investigation by the U.S. government for giving China access to Nvidia GPUs, which the company has denied.

Meanwhile, Nvidia’s Huang, a major ally of President Donald Trump, has spent the past year and a half advocating for the U.S. government to ease export restrictions on computer chips going into China.

President Trump said Monday that he supported the CEO but confirmed that the FBI is investigating the issue. Republican and Democratic lawmakers are also seeking answers.

In the statement by Nvidia’s board, it said it will launch an independent investigation “in light of recent reporting” that Huang “has been the target of a foreign intelligence effort.”

While the board said there is “no reason to believe that either national security or Nvidia secrets were compromised,” it does plan to “examine all available information” as part of its investigation, which will be conducted by a “committee of independent directors, assisted by outside independent counsel.”

Voicing “confidence in Jensen and his leadership team,” the board said the Nvidia CEO and co-founder “fully supports the review and has committed to cooperating with it.”

“The board prioritizes U.S. national and economic security, which is paramount to the interests of Nvidia and its shareholders,” it wrote.

In a Sunday email Huang sent to Nvidia’s employees, the CEO apologized for being “unfaithful” to his wife and said that the company’s employees, board, partners and shareholders “deserve better from me.”

“My responsibility is to serve you and be worthy of your trust. I have fallen short of that responsibility. I am fully committed to Nvidia and will work to earn back your confidence,” he wrote in the email published to the company’s website.

In a statement provided to CRN, an Nvidia spokesperson said, “This news will not slow Nvidia. Jensen is committed to continuing to lead Nvidia as CEO without interruption.”

Other Channel Partners Take A ‘Wait-And-See’ Approach

Executives at three other Nvidia channel partners said they are taking a “wait-and-see” approach and want to see how the investigation plays out.

“There’s so many new questions that are going to come into play,” said a top executive at a fourth Nvidia channel partner in the U.S.

Even so, the systems integrator executive said he doesn’t think this issue will impact demand for Nvidia’s products or the way his company works with Nvidia.

“It’s not going to change the way that we’re going to strategize,” he said.

The CEO of a fifth Nvidia channel partner considered the episode a “non-event” that won’t have a “direct impact” on the daily operations of companies like his.

“We’ll just have to wait for facts to present themselves and then everybody can make up their own mind as to how serious it is and whether it is worth making any changes to business plans,” the systems integrator CEO said.

Nevertheless, he added, the episode highlights how important it is for Nvidia to have a strategy in place in case the board decides to oust Huang.

“If anything, this kind of points to the need for Nvidia to have a good succession plan,” said the systems integrator CEO.