US Treasury Secretary Scott Bessent has blamed the Commerce Department, led by Howard Lutnick, for failing to properly oversee the export of high-spec Nvidia chips. The remark comes as the fallout widens following revelations involving former Nvidia boss Jensen Huang and cloud computing firm Megaspeed.
Congressional Scrutiny and Political Pressure
Jensen Huang departed from Nvidia after disclosures that he had an affair with a former Megaspeed executive alleged to be a Chinese spy. Megaspeed, which had been purchasing advanced chips from Nvidia, was investigated by US government agencies over suspicions of smuggling chips into China, though it remains absent from the official trade restriction list. Bessent told CNBC that several government agencies supported adding Megaspeed to the entity list for months, but noted that the Commerce Department holds ultimate authority over the process.
Lutnick now faces mounting pressure from both political parties to justify his department’s actions and has been summoned to testify before the Senate Banking Committee next month. Additional congressional committees have directed Lutnick and his department to preserve all records concerning Nvidia and Huang. Bessent expressed frustration regarding delays in updating the export control list and reports of artificial intelligence chips leaking into China. He stated that President Donald Trump explicitly prohibited sending Nvidia chips superior to the H100 model to China, warning that any leakage harms domestic companies and grants an advantage to Chinese competitors.
According to the New York Times, the Commerce Department investigated Megaspeed last year over suspicions of smuggling advanced AI chips into China. While various quarters pressed the department to blacklist the cloud computing firm, Financial Times reports indicated that the agency deliberately delayed those efforts.
Accountability at Nvidia and Trade Policy Concerns
Alongside the Commerce Department, Bessent directed criticism toward Nvidia itself during an appearance on CNBC’s Squawk Box. He argued that the primary focus should examine whether Nvidia thoroughly vetted its client and maintained robust measures to prevent leakage to pass-through shell companies, emphasizing that responsible individuals at the firm must face accountability.
Huang has also been summoned to testify before the Senate Banking Committee regarding his relationship with the former Megaspeed executive. Committee Chairman and Republican Senator Tim Scott stated on X that recent reports generate serious concerns about national security and the safeguarding of sensitive American technology. Meanwhile, Democratic leaders including House Ways and Means Committee Ranking Member Richard E. Neal and Senate Finance Committee Ranking Member Ron Wyden initiated investigations into how Nvidia obtained permission to sell advanced chips.
Neal and Wyden pointed out that advanced H200 chips could be sold to Chinese firms provided they were first imported from manufacturing facilities in Taiwan to America for inspection, subject to a 25% tariff under a Trade Act provision intended to counter national security risks from imports. They argued that the administration’s application of the statute achieved the opposite outcome by undermining national security and endangering Americans.
