One point that has been raised elsewhere (I'll link if I can remember where) is that if Mr. Huang was consciously violating U.S. law (export restrictions) then CFO Colette Kress would have to have known. The fact the board elevated her to the interim CEO role has to be taken as a statement the board's confidence that she did not know of any deliberate attempts to evade American export rules which by definition she would have.
The fact that among Nvidia's ten board members is Stephen Neal, Chairman Emeritus and Senior Counsel of (very) high-buck law firm, Cooley LLP, and that he apparently was okay with Ms. Kress taking over the reins, would tend to back the thesis that the board does not suspect that Colette Kress was complicit in any illegality which, again by definition of her role at the company, she would have been.
My best guess is that Huang and Nvidia thought they were working within the parameters established by the U.S. Commerce department which would point the finger of responsibility at Howard Lutnick in his role as Secretary of Commerce for clearing any potential violations.
There is also the possibility that regulatory responsibility extends back to the previous U.S. administration.
As a side note Cooley quite proudly, and justifiably so, states on its website "Cooley formed NVIDIA in 1993 and has served as its principal outside corporate and litigation counsel for 28 years, handling its IPO in 1999, multiple corporate matters and major litigation."
During the mid/late twenty-teens our Cooley boilerplate was:
Cooley is one of the big dogs of the VC legal eagle biz. Something like a third of the unicorns on the WSJ's Billion Dollar Startup Club list have used Cooley for one purpose or another.
Additionally, 20 or 21 of the companies on the "Technology Review's 50 Smartest Companies 2017" list have been represented or counseled by the firm. As I said, one of the biggies.
And after that longer than usual introduction here is Wolfgang Munchau at UnHerd, November 13:
Recall the Nord Stream pipeline explosions of September 2022. We were told it was the Russians that did it. The story was widely believed, and retold, but came with no evidence attached — and this keeps on happening. There is a clear parallel with the Jensen Huang affair in that there is no available evidence, not a shred, that Alice Huang acted as a Chinese spy. Stories like these fall into a category immortalized by the American author H.L. Mencken: they are “neat, plausible and wrong”. In all such cases, we’d do better if we separate what we know to be true, from what sounds too good to be true.
The next step is not to speculate, but collect the available evidence. It is a hard fact that Huang resigned without the board of Nvidia having even completed an investigation.
Another hard fact, one that does not sit well with the honeytrap story is that, this January, China imposed import restrictions on Nvidia’s benchmark H200 chip, even though the US commerce department had by then already started to permit the exports of these cards. This is the part of the series of cards that is used predominantly for AI. China’s policy on AI chip imports has been restrained, as it encouraged companies like ByteDance, Alibaba and Tencent to import Nvidia chips, but at the same time also imposed a preference for domestic products.
We may never know whether Alice Huang is a Chinese spy, or merely a corporate fixer. The Hong-Kong based author Desmond Shum believes it is the latter by looking at Huang’s own history. As he notes, investigations into corporate records, court rulings and stock exchange disclosures show “Huang’s involvement in a series of complicated capital-market transactions”.
“The recurring pattern was the use of intermediaries and layered ownership structures that could separate the people appearing on transaction documents from those with the underlying economic interests,” Shum adds. “When Huang subsequently emerged as the public face of Megaspeed, a little-known Singapore company purchasing billions of dollars’ worth of Nvidia chips, she was just repeating the same business model she has perfected.”
So, with apologies to Richard Feynman, let us instead try to ask questions that at this point cannot be answered, as opposed to accepting answers that cannot be questioned. Here are two: could this really be a forewarning of some bad commercial news to come? Are sales about to fall off the cliff? The Nvidia share price has fallen by nearly a third from its peak in early October. Will we hear the interim CEO declare her shock when she looks at the books? Maybe we should take a deeper look at the small print of SEC filings by the tech industry, starting with Nvidia.
Or maybe, it is a national security story, but of a different kind? It may not be about the sale of goods, but the flow of information. Did Jensen Huang have any involvement in the flow of technology secrets to China? If that were so, the honeytrap story may just be a smokescreen....
....MUCH MORE
