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Treasury Secretary Scott Bessent told CNBC on November 13 that multiple agencies had pushed for months to place Megaspeed on the Commerce Department’s entity list but that Lutnick’s department held the final authority. Bessent said several senior officials including those from the Treasury State Pentagon and US Trade Representative offices supported adding the Singapore-based firm to the trade blacklist. According to CNN the comments marked a rare public airing of internal tensions within the Trump administration over how to handle suspected leaks of advanced artificial intelligence chips to China.
The Nvidia scandal erupted after Jensen Huang resigned as chief executive following reports of an extramarital affair with Alice Huang an executive at Megaspeed whom US authorities suspect of being a Chinese spy according to a New York Times investigation. Huang issued a statement to employees acknowledging he had been unfaithful to his wife while pledging to cooperate with any probes and to protect national security. Business Insider reported that the affair drew fresh scrutiny to earlier warnings shared with senior officials including Lutnick about potential espionage risks tied to the company’s dealings.
Megaspeed purchased more than 4.8 billion dollars in advanced Nvidia chips since June 2024 while facing suspicions it diverted them to Chinese entities in violation of US export controls Reuters reported. A classified memo outlining concerns about Alice Huang and the company was provided to Lutnick who resisted immediate action against the firm a New York Times account found. Axios detailed how an investigation into Megaspeed was reportedly halted after Nvidia’s general counsel contacted Commerce officials invoking a senior Trump appointee before the case was referred to the Justice Department.
Bessent confronted Lutnick during a Situation Room meeting last week pressing him on why the company had not been blacklisted according to two people familiar with the exchange who spoke to CNN. Lutnick responded that he would look into the matter but did not commit to specific steps the sources said. Newsweek noted that some Trump advisers have begun discussing whether Lutnick should be removed from his post though the president has expressed confidence in him through a White House statement to the New York Post describing Lutnick as the most transformative commerce secretary in modern history.
Lawmakers from both parties have demanded answers with Senators Elizabeth Warren and Chris Coons urging the preservation of all documents related to Nvidia’s chip exports and national security risks Reuters reported. Republican Senator Jim Banks called for Lutnick to testify before Congress as soon as possible citing allegations that loopholes allowed sales despite presidential directives against them a Forbes account stated. Incoming committee chairs have signaled hearings into whether the administration properly enforced restrictions on technology transfers to China.
Nvidia shares have tumbled since the scandal broke with the company losing hundreds of billions of dollars in market value according to multiple financial reports including from the BBC. Bessent shifted some focus away from Huang’s personal conduct telling CNBC the real issue was whether Nvidia knew its clients well enough to prevent leakage of chips above the H100 level that President Trump had barred from reaching China. The treasury secretary added that any such diversion frustrates efforts in the AI race and advantages Chinese competitors a frustration echoed across administration statements.
Commerce has not added any company to its entity list in more than a year despite mounting national security concerns an AI Weekly review of the Federal Register found. The case has amplified questions about enforcement of export controls on sensitive technology with bipartisan letters from lawmakers including Senators Ron Wyden and Representative Richard Neal pressing for investigations into approvals for sales linked to Chinese military or government entities Reuters detailed. Huang has not been accused of criminal wrongdoing and told associates he had no knowledge of any espionage ties according to Trump who described him as an honourable guy in public remarks.
