The political fallout from the Nvidia spy scandal has reached President Donald Trump’s cabinet, with Treasury Secretary Scott Bessent publicly blaming the Commerce Department for failing to blacklist a Singapore company suspected of funnelling powerful Nvidia AI chips to China.
Bessent’s criticism, a rare public rebuke of one department by another, has put fresh pressure on Commerce Secretary Howard Lutnick. Lutnick has agreed to testify before the Senate as questions grow over his department’s handling of export controls.
The scandal led Nvidia chief executive Jensen Huang to resign on Thursday. It has raised concerns that high-end Nvidia chips reached China, the United States’ main rival in artificial intelligence, in breach of Washington’s export restrictions. It has also prompted questions about whether senior officials in the Trump administration turned a blind eye to Nvidia’s dealings with Chinese-linked companies.
As head of the department that oversees US export controls, Lutnick is ultimately responsible for enforcing the rules meant to keep advanced Nvidia processors out of Chinese hands. Lutnick, a billionaire investor, is a close friend of Trump, who had made Huang one of his closest advisers on artificial intelligence.
Speaking on CNBC, Bessent said the Treasury, the Defence Department, the US Trade Representative’s office and the State Department had backed adding the Singapore company, Megaspeed, to Washington’s trade blacklist for months. But, he said, Commerce holds the pen on the decision. He said he was frustrated because Trump had made it very clear that China should not receive any Nvidia chips above the H100 model. Any leakage, he said, hurts American companies and hands China an advantage in the AI race.
Lutnick is also facing pressure from Congress. Senator Jim Banks, an Indiana Republican, told Fox News he wanted Lutnick to testify before the Senate Banking Committee as soon as possible, pointing to bipartisan questions about what happened over the past year. A Commerce Department spokesperson, Kristen Eichamer, told US media on Thursday that Lutnick had agreed to testify.
News outlet Axios reported on Wednesday that Trump had approved action against suspected diversions of Nvidia chips to China on at least three occasions this year, but that Lutnick did not act on the requests.
Megaspeed is suspected of helping Chinese firms get around US export controls by buying Nvidia chips for its data centres in Southeast Asia and routing them on to China. The company reportedly traded more than four billion dollars’ worth of Nvidia chips over two years.
This week, US media identified Megaspeed’s former director, Alice Huang, as an alleged Chinese intelligence asset who had a relationship with Jensen Huang. The two are not related. Beijing has denied the spying allegations. Jensen Huang acknowledged an extramarital affair in a letter to Nvidia employees on November 8, without naming the woman involved. Nvidia’s board has said it will investigate, and three congressional committee chairs have asked Jensen Huang to attend a closed-door briefing in Washington.
