Treasury Secretary Scott Bessent on Friday publicly blamed the Commerce Department for failing to blacklist Megaspeed, a Singapore-based Nvidia customer suspected of diverting advanced artificial intelligence chips to China, escalating a blame game inside the Trump administration days after Nvidia co-founder Jensen Huang resigned.
"Treasury, War, [the Office of the US Trade Representative], and State were in favor of putting Megaspeed on the entity list for months, but Commerce has the pen," Bessent said on CNBC's "Squawk Box". "You will have to ask them about their internal processes." The Entity List is a Commerce Department trade blacklist that restricts listed companies from receiving American technology without a licence.
Bessent said President Donald Trump had "made it very clear that China should not receive any Nvidia chips above H100s", referring to an older generation of the company's AI processors. "I am frustrated when President Trump made it very clear that China should not receive any Nvidia chips above" a certain technological level, he said. "And so any leakage is very frustrating because it hurts our great companies, and in the AI race gives the Chinese an advantage."
The row follows Huang's resignation on Thursday as Nvidia's chief executive, president and board member after reports of an affair with Alice Huang, a former Megaspeed executive whom US intelligence suspects of working for Chinese intelligence. Megaspeed, a major Nvidia customer, is suspected of buying advanced processors for data centres in Southeast Asia and routing them to China, with reports putting the trade at more than $4 billion worth of Nvidia chips over two years. Megaspeed has said there was no evidence it illegally shipped Nvidia chips to China.
Bessent had confronted Commerce Secretary Howard Lutnick over the failure to blacklist Megaspeed during a tense meeting last week, according to reports by Axios and CNN, although a Commerce Department spokesperson denied that conversation took place. CNN reported that some of Trump's advisers, reeling from the fallout of Huang's resignation, have begun discussing whether Lutnick should be dismissed. The White House said Trump continues to have complete confidence in Lutnick.
Democratic Senator Ron Wyden of Oregon and Democratic Representative Richard Neal of Massachusetts said on Thursday that they were opening an investigation into the administration's approval of advanced Nvidia chip sales to China, and asked Lutnick to preserve records related to export licences and the department's communications with Nvidia. Lutnick has agreed to testify before the Senate Banking Committee, and is set to testify in early December about his agency's handling of AI chip export controls.
Bessent also said Nvidia staff should be investigated over what they knew about Megaspeed, and said the personal allegations risked distracting from the national security and export-control issues. The Commerce Department's Bureau of Industry and Security opened an investigation in 2024 into Nvidia's sales to Megaspeed, and the inquiry was later turned over to the Justice Department. In January, Commerce said it would review licence applications for exports of Nvidia's more advanced H200 chips to China on a case-by-case basis.
