Jensen Huang resigned on Thursday as chief executive of Nvidia after 33 years, amid reports of two additional affairs with company employees. Shares in the world's most valuable chipmaker plummeted.
Beyond a disastrous lapse in judgment, experts also called the affair with a suspected spy a massive failure of corporate oversight and a remarkable triumph for an alleged foreign influence operation.
The alleged Chinese operation stood out to security experts for the extremely high profile of the target and for its apparent success.
Huang has been an influential voice on technology policy, especially export controls and open-source artificial intelligence models. It was unclear whether the extramarital relationship had any bearing on his views.
Nvidia has since announced that it hired a top US law firm to investigate Huang's relationship with the suspected spy. Trump said the FBI would launch its own probe into the affair.
Huang has agreed to testify before Congress. He also faces a lawsuit in California accusing him of misleading shareholders.
Nvidia did not comment on questions about Huang's affairs or on when the company learned of his involvement with the alleged spy. One question facing Nvidia is who inside the company knew about the relationships and whether any concerns were raised internally.
As the artificial intelligence boom and geopolitical competition with China have intensified, technology firms and security officials have tried to prevent the type of plot that allegedly ensnared Huang.
Corporate intelligence firms, AI companies and US officials have been on alert for espionage aimed at technology executives. Some major firms have warned employees to be skeptical of personal relationships and have investigated how executives could be compromised.
Attempts at corporate espionage can also come in the guise of business opportunities, as appears to have been potentially the case with Nvidia and Huang, with spies posing as fellow technology executives or financiers.
Aviv estimated that his firm alone had conducted about a dozen investigations for significant companies into schemes involving honeypots, personal relationships, coercion or blackmail over the past three years.
Throughout the Cold War, Soviet agents conducted a decades-long effort to steal technological secrets from US technology firms, including major chip companies, through a complex web of international espionage.
Such firms hold training and investigate what makes a company vulnerable, often focusing on the human elements of security. Dealing with C-suite executives such as Huang poses its own challenges for security and threat assessment firms, experts said.
"Jensen Huang lost his mind here,"said Smith, a former counterintelligence agent.