U.S. Treasury Secretary publicly faults Commerce Department over delayed Nvidia chip restrictions

U.S. Treasury Secretary Scott Bessent said Friday he was frustrated with the Commerce Department's delay in restricting Nvidia chip exports to a company led by an alleged Chinese spy, an unusually public rebuke of a fellow cabinet member.

Speaking on CNBC, Bessent said the Treasury, State and Defence departments, along with the U.S. trade representative, had favoured adding Singapore-based Megaspeed International to an export control list for months, but that the decision belongs to Commerce. "Commerce has the pen, and you will have to ask them about their internal processes," Bessent said. "My deputy has been pushing this for months."

Commerce Secretary Howard Lutnick oversees U.S. government controls on exports of sensitive high-tech goods. He has faced growing scrutiny over his reportedly close relationship with Nvidia CEO Jensen Huang, whose resignation followed reports that he had an affair with Megaspeed CEO Alice Huang, a woman U.S. intelligence suspects is a Chinese spy. China has denied the spying allegations. The former Nvidia chief is also close to President Donald Trump and visited the White House on Sept. 29 to discuss AI safety.

The New York Times reported Thursday that Lutnick resisted placing tighter limits on sales of Nvidia's most advanced chips to China. Chinese firms have accessed Nvidia chips through companies such as Megaspeed, which has reportedly purchased more than $4 billion US worth of the advanced semiconductors. The chips are central to the buildout of artificial intelligence, powering models developed by OpenAI and Anthropic.

The Commerce Department's Bureau of Industry and Security opened an investigation into Megaspeed in 2024 before handing the case to the Justice Department. The department's national security division is now examining whether Megaspeed violated export control laws, an inquiry that also includes scrutiny of Alice Huang, according to a person familiar with the matter. Last year the company was accused of illicitly shipping advanced Nvidia chips into China, and in December it said there was "no evidence" of such exports. On Thursday, Megaspeed said it takes compliance with U.S. export control laws "extremely seriously" and was committed to working "constructively and transparently" with the government.

Bessent declined to comment on a Times report that he confronted Lutnick about Megaspeed last week in the White House situation room. Separately, Axios reported this week that Lutnick received a classified memo this spring warning about Jensen Huang's relationship with a suspected spy. The Commerce Department did not immediately respond to requests for comment.

Members of Congress from both parties have promised investigations and called on Lutnick to testify. On Thursday, Oregon Sen. Ron Wyden and Massachusetts Rep. Richard Neal, the top Democrats on the Senate finance and House ways and means committees, sent Lutnick a letter demanding he preserve all records tied to decisions about Nvidia chip exports. They wrote that Trump's approval of advanced chip sales to China "raises critical questions about whether and to what extent political considerations are improperly influencing policy decisions made by the Administration."

Rep. Brian Mast, a Florida Republican who chairs the House foreign relations committee, asked Jeff Kessler, undersecretary of commerce for industry and security, to appear at a Dec. 2 hearing on chip smuggling and "reported interference by private companies into export control policies and enforcement investigations." Mast also requested that Nvidia chief counsel Tim Teter sit for a closed-door interview the same day.

Republican Sen. John Kennedy of Louisiana urged Lutnick to hold a press conference and said he should be subpoenaed if necessary. "The Commerce Department greenlit $4 billion of sales of advanced chips to the company of the spy that Mr. Huang was having an affair with and I want to know why," Kennedy said. "I want to know why the Commerce Department did it in light of the export controls, and everything I read indicates that this was a decision by the secretary himself."