"It takes 20 years to build a reputation, but only five minutes to ruin it." This saying by Warren Buffett rings true once again as Jensen Huang, the CEO of NVIDIA and the so-called 'AI Emperor,' steps down amid controversy. Huang's 33-year journey, which began in 1993 at a family restaurant in Portland, Oregon, has come to an abrupt end just over a week after the news broke. While the saying 'nothing lasts forever' holds true, Huang's departure is particularly shocking given his remarkable success and peak performance.
NVIDIA's status as a leading company is well-known. Until recently, it was a global powerhouse with a market capitalization exceeding $5 trillion, dominating 80-90% of the GPU market, which is central to the AI era. Heads of state and CEOs from around the world, including South Korea's Samsung, SK, Hyundai, and LG, sought Huang's favor, demonstrating the high regard in which he was held.
What Lies Ahead for NVIDIA After Jensen Huang's Exit?
All eyes are now on the 'post-Huang' era. The departure of Huang, the founder and absolute authority at NVIDIA, raises questions about the company's future direction. This is a major concern for the AI industry, partner companies, rivals, and the capital markets. Many are drawing comparisons to Apple after Steve Jobs, given the significant influence and charisma both leaders had in their respective industries.
Steve Jobs resigned as Apple's CEO in August 2011 due to health issues and passed away in October of the same year. He appointed Tim Cook as his successor, who had already been acting as CEO during Jobs' declining health. Consequently, Apple's early years under Cook relied heavily on the iPhone ecosystem and its enthusiastic consumer base established by Jobs. Although the company faced concerns about innovation stagnation until around 2014, it managed to regain its footing by expanding into services and wearables, despite criticisms regarding its delayed response to the AI era.
In contrast, NVIDIA faces a different situation following Huang's exit. Investment banks have noted two key differences between Apple after Jobs and NVIDIA now. First, there is no clear successor at NVIDIA; while Apple had Tim Cook, NVIDIA currently has Colette Kress, the Executive Vice President and CFO, appointed as interim CEO. It remains uncertain whether a new CEO will be chosen from within or brought in from outside. Additionally, Huang's position at NVIDIA was absolute; he was the founder and the sole leader of a flat organization with 60 direct reports. It is unclear whether a new CEO can maintain the same level of authority and charisma.
Secondly, the nature of the businesses differs. The iPhone created a consumer ecosystem that sustained demand, while GPUs are capital goods that require annual advancements in speed. If NVIDIA fails to innovate, customers may switch to competitors. Companies like AMD, Broadcom, and various Chinese semiconductor firms are poised to fill any gaps.
NVIDIA Shares Drop 4% as Market Takes Wait-and-See Approach
Despite Huang's departure, many believe NVIDIA's position will remain strong. This optimism is based on the lengthy chip design process and the fact that much of the revenue for the next one to two years is already secured. NVIDIA's unique ecosystem, known as 'CUDA,' also fuels this optimism. If GPUs are likened to car engines, CUDA serves as the control system that maximizes engine efficiency. Although competitors like AMD can produce GPUs, they struggle to catch up with NVIDIA due to CUDA's advantages.
It has been just a day since Huang's resignation was announced, and the market has yet to lean decisively toward pessimism or optimism. NVIDIA's stock price fell less than expected. On November 12, following the announcement of Huang's resignation, the stock initially plummeted by over 14% but ultimately closed down 4.34%. In after-hours trading, it rose by $1.65 (0.99%) to $167.84. The market capitalization did not drop below the $4 trillion mark.
Wall Street interprets the relatively modest decline in NVIDIA's stock as a signal of 'wait and see.' The stock had already adjusted by about 30% since its peak in October, and the likelihood of Huang's departure had been anticipated, leading to the perception of a 'forewarned crisis.'
However, this situation is far from settled. The market will likely react to NVIDIA's earnings report on November 17 and the subsequent appointment of a new CEO. Long-term, the critical question will be how NVIDIA's growth roadmap, established by Huang, will evolve. Will the next-generation architectures following Vera and Rubin continue to be competitive? How will NVIDIA respond to price wars in the inference market? And will Huang's management style, which artificially stimulated AI demand, remain effective?
Impact on South Korean Semiconductor Firms
The developments in Silicon Valley and Wall Street are also of great interest to South Korean semiconductor companies. The changes in NVIDIA's governance structure raise questions about whether this will pose a crisis or an opportunity for these firms.
Currently, many analysts believe that this situation will not pose a significant short-term threat to South Korean memory companies. NVIDIA has already secured 12 months' worth of orders for HBM, which it supplies. There are also projections that this could present a long-term opportunity. If NVIDIA's dominance is shaken, leading to a multi-player system with AMD, Broadcom, and Google TPU, South Korean semiconductor firms, which are the leading producers of HBM, could gain greater bargaining power.
Of course, there are also opposing scenarios. If NVIDIA reduces its financial support, investments in data centers by NeoCloud and AI startups could decline, leading to decreased demand for HBM.
NVIDIA Without a Captain... What Lies Ahead?
Great companies often have exceptional founders. However, not all great companies maintain their greatness after the departure of their founders, whether voluntary or involuntary. In the U.S., companies like Boeing, Intel, McDonald's, and BP have experienced fluctuations following the sudden exits of their CEOs. Samsung also lost direction for a time after the passing of Chairman Lee Kun-hee.
Even without a captain, a train continues to run, thanks to inertia. NVIDIA is likely to continue operating smoothly for a while after Huang's departure. The influx of orders worldwide remains unchanged, and the AI market's position is unlikely to shift dramatically in the near term. Huang's design and establishment of the AI ecosystem at NVIDIA is vast and robust.
The challenge arises when the power of inertia wanes. At that moment, the train may come to a halt. Even if inertia persists for a while, the company may face crossroads where it struggles to determine its direction. Before the momentum created by Huang's legacy fades, who will take the helm of the 'great ship' NVIDIA? Can the new CEO navigate the barriers and crossroads that lie ahead? This is the point the market is closely watching. The true test for NVIDIA will come at that moment.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.