Nvidia faces subpoena threat as FBI probes chip smuggling to China

Nvidia is navigating a severe national security crisis following allegations that up to $7.5 billion worth of chips were funneled to Chinese companies through the neocloud Megaspeed. The alleged smuggling network involved employee Alice Huang, and President Trump acknowledged that the FBI is investigating the matter, noting he was briefed in April but took no immediate action. The New York Times reported that a Commerce Department investigation into Megaspeed was halted after Nvidia General Counsel Tim Teeter contacted investigators, claiming approval from a superior, a move that alarmed agents concerned about procedural violations.

Political pressure has intensified with House Foreign Affairs Committee Chair Brian Mass stating he will issue a subpoena if Jensen Huang does not attend a closed-door meeting next week. Nvidia stock has dropped 11% since the story broke, reflecting market anxiety over the company's governance. The Wall Street Journal reports that Nvidia has no formal succession plan, with the board viewing governance as a formality. The board is currently investigating Huang with an outside law firm, while the WSJ suggests that a reined-in Huang is the best option to reassure shareholders and the government. Nvidia's task is to find a way to keep Huang on while reassuring stakeholders that it takes national security risks seriously.