Treasury Secretary Scott Bessent on Friday publicly blamed Commerce Secretary Howard Lutnick’s department for failing to place Megaspeed, a China-linked data company, on the export-control blacklist, widening the public split inside the Trump administration over the Nvidia chip scandal.
Megaspeed is the Singapore-based firm at the center of the affair that forced Jensen Huang to resign as Nvidia’s CEO last week. U.S. intelligence agencies have reportedly determined that Alice Huang, a Megaspeed executive with whom Huang admitted an affair, is a Chinese spy. The Commerce Department investigated Megaspeed last year over suspicions it had smuggled advanced Nvidia AI chips into China, but the company has never been added to the entity list that bars U.S. firms from working with it.
Bessent told CNBC’s “Squawk Box” that the departments of Treasury, Defense and State and the Office of the U.S. Trade Representative all “were in favor of putting Megaspeed on the entity list for months.” “But Commerce has the pen… and you will have to ask them about their internal process,” he said.
The practical consequence is that advanced Nvidia chips kept flowing toward China through a company U.S. agencies had flagged for months. For readers, that means the AI race between the United States and China is being shaped by technology and by a bureaucratic fight inside Washington over who controls export policy. Nvidia’s stock has already paid a price: it plunged 14% after Huang’s resignation, closed down 4.3% on the day, and has lost more than $1 trillion in value since its October peak, according to CBC News.
The Situation Room clash
Bessent’s comments followed an Axios report that he had confronted Lutnick in the White House Situation Room about why the Commerce Department had resisted export controls on Megaspeed. Commerce spokeswoman Kristen Eichamer said Wednesday that Bessent and Lutnick had “no such conversation.” Asked about the report, Bessent told CNBC, “We don’t repeat conversations in the Situation Room.”
The BBC reported that there is growing pressure on Lutnick across the political spectrum to explain his department’s actions. Bessent said he was “frustrated” by the delays and by reports of AI chip leakage into China. “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 Bessent wants investigated
Bessent shifted the focus away from Huang’s personal conduct and onto Nvidia’s sales practices. “The story has been thus far on Jensen Huang’s personal foibles,” he said. “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?”
“I think it’s important that anyone at the company there be held accountable for that,” he added. Asked whether he believes Nvidia’s highest-level processors reached China through Megaspeed, Bessent said, “I think that there is a lot of leakage in the system, and we are constantly working to close that down.”
The Washington Post reported that Trump’s top economic advisers are clashing over Lutnick’s handling of Nvidia, and CNN reported that the White House is discussing a possible ouster of a top Trump aide over China chip exports. CNBC said the cabinet secretary’s comments hinting at disunity within the administration followed the Axios report about the Situation Room confrontation.
Congress moves
Lutnick has agreed to testify before the Senate Banking Committee next month. Senator Tim Scott of South Carolina said Thursday that both Lutnick and Huang had been asked to appear. Commerce spokeswoman Eichamer said Lutnick “has proactively agreed to appear voluntarily before the Banking Committee to address their questions.”
Huang has separately been asked to sit for a closed-door briefing on Dec. 1 before the House committees on China, intelligence and foreign affairs. The Republican chairmen of those panels have also asked Nvidia general counsel Tim Teter to participate in a closed-door interview on Dec. 2. House Foreign Affairs Chairman Brian Mast asked Jeff Kessler, Commerce’s under secretary for industry and security, to appear before his committee on Dec. 3 for a hearing on “chip smuggling, adversary military use of advanced AI chips, reported interference by private companies into export control policy and enforcement investigations.”
The most notable turn in Bessent’s remarks is the reframing. He called Huang’s affair “personal foibles” and insisted the real question is corporate accountability, a question that could outlast Huang himself. Bessent, whom Trump appointed as Treasury Secretary in 2025, now sits at the center of the administration’s economic policy, as CruxBuzz reported at the time.
What is the entity list?
The entity list is the Commerce Department’s roster of foreign companies that U.S. firms are barred from doing business with. Being added to it effectively cuts a company off from American technology and supplies. Megaspeed was investigated over suspicions it had been smuggling Nvidia’s advanced AI chips into China, but it has not been placed on the list, a delay that Bessent and other agencies have now publicly questioned.
The Commerce Department did not respond to CNBC’s request for comment on Bessent’s remarks. Megaspeed has been contacted for comment. With testimony scheduled through December and a trillion dollars in market value already erased, the Nvidia scandal is moving from a corporate crisis into a prolonged political and regulatory fight.
Nvidia’s weight in the market means the damage reaches far beyond one company. It makes up about six per cent of the S&P 500 and about nine per cent of the tech-heavy Nasdaq, and technology companies now account for an estimated 40 per cent of the S&P 500, according to CBC News. That means the slide has reached index funds and retirement accounts well beyond the company itself. Michael Dehal, a senior portfolio manager at Dehal Investment Partners, said the quick appointment of CFO Colette Kress as interim CEO helped steady the stock, calling the temporary resolution “reassuring to investors.”
