Bessent Faults Commerce Dept for Delay on Nvidia Chip Curbs

Treasury Secretary Scott Bessent said the Commerce Department, led by Howard Lutnick, failed to act for months on warnings that Nvidia's advanced AI chips were being smuggled to China, as congressional pressure built on Lutnick over the export-control lapse, according to BBC News.

What did Bessent say about Commerce's role?

Bessent told CNBC's Squawk Box that multiple government agencies "were in favour of putting Megaspeed on the entity list for months," but that the decision rested with one department. "Commerce has the pen... and you will have to ask them about their internal process," he said, according to the BBC. Bessent said he was "frustrated" by the delay and by reports that advanced chips leaked into China despite the administration's stated limits.

Why is Megaspeed central to the dispute?

Megaspeed, a cloud-computing firm, employed the businesswoman at the center of Jensen Huang's ouster as Nvidia chief executive after revelations of an affair; she is also alleged to have been a Chinese intelligence asset, the BBC reported. The company had been investigated by the Commerce Department last year over suspicions it was smuggling Nvidia's advanced AI chips into China, according to the New York Times, as cited by the BBC. The Financial Times separately reported that Commerce was delaying efforts to add Megaspeed to the entity list, the trade restriction that would have barred US firms from supplying it. Megaspeed has not responded to a request for comment relayed through the BBC.

Bessent said President Trump had set a clear line. "President Trump made it very clear that China should not receive any Nvidia chips above H100s, so any leakage is very frustrating because it hurts our great companies in the AI race, because it gives the Chinese an advantage," he said.

What testimony has Lutnick been called to give?

The Senate Banking Committee has summoned Lutnick to testify next month on the Commerce Department's handling of Nvidia's chip exports, the BBC reported. Separately, other congressional committees have directed Lutnick and his department to preserve all records related to Nvidia and Huang. Huang himself has been called to testify before the same committee about his relationship with the former Megaspeed executive.

Does Bessent also blame Nvidia?

Bessent said the focus on Huang's personal conduct has obscured a more pressing question for the company. "The real story here should be: Did Nvidia know their client, and was there a robust effort at Nvidia to make sure that there was no leakage and that they were selling to what were obviously pass-through shell companies?" he said. "It's important that anyone at the company there be held accountable for that."

How has the episode affected markets?

The fallout has rippled into trading. US stocks swung on Nvidia-related news before paring early losses, according to HTT News.

What happens next?

Lutnick's Senate Banking Committee appearance next month is expected to center on why Megaspeed was not added to the entity list despite internal agency support for doing so, and on the department's export-licensing process for Nvidia's China-bound chips. The committee's inquiry, along with record-preservation orders issued to Commerce, signals that scrutiny of the chip-export process will continue regardless of how the Huang matter is resolved.