US: Bessent Blames Lutnick for Nvidia China Chip Export Delays

• Treasury Secretary Scott Bessent publicly criticized the Commerce Department for delaying restrictions on Nvidia chip exports to China.
• Commerce Secretary Howard Lutnick faces scrutiny over his close ties to former Nvidia CEO Jensen Huang, whose resignation is linked to a firm suspected of having a Chinese spy as CEO.
• Multiple U.S. agencies, including Treasury, State, and Defense, had advocated for months to add Megaspeed International, a major buyer of Nvidia chips for China, to an export control list.
• Congressional leaders are demanding investigations into Lutnick's actions and the influence of political considerations on export policy decisions.
• The controversy highlights internal Trump administration divisions over controlling advanced AI chip technology access for China.

Wyden and Neal articulated that the Trump administration export policy regarding advanced Nvidia chip exports to China 'raises critical questions about whether and to what extent political considerations are improperly influencing policy decisions made by the Administration.'

Treasury Secretary Scott Bessent recently voiced significant frustration regarding the Commerce Department's perceived delay in implementing restrictions on the export of specific Nvidia chips to China. This public criticism arrives amidst heightened scrutiny surrounding Commerce Secretary Howard Lutnick, whose close relationship with former Nvidia CEO Jensen Huang has drawn attention. Huang's resignation on Thursday is reportedly tied to Nvidia's connections with Singapore-based Megaspeed International, a company that prominently features its partnership with Nvidia on its official website.

Reports indicate that Jensen Huang allegedly had an affair with Alice Huang, a former executive at Megaspeed. U.S. intelligence agencies reportedly suspect Alice Huang of being a Chinese spy, a claim that China has explicitly denied. Megaspeed International has been a significant conduit for Chinese firms to acquire advanced Nvidia semiconductors, having purchased over $4 billion worth of these critical components. The unfolding situation highlights the complex interplay between U.S. technology policy, international business dealings, and national security concerns.

Secretary Bessent's remarks on CNBC underscored a deep division within the Trump administration regarding US AI chip restrictions China. He indicated that his department, alongside the Departments of State and Defense and the U.S. Trade Representative, had advocated for months to place Megaspeed International on an export control list. However, the Commerce Department, which holds primary authority over U.S. government controls for sensitive, high-tech exports, maintained jurisdiction over the matter. Bessent explicitly referenced President Trump's clear directive that China should not receive any Nvidia chips more advanced than the H100 series, an older generation of the company's AI processors.

The New York Times reported that Howard Lutnick Nvidia export controls were reportedly resisted by the Commerce Secretary, who opposed imposing stricter limits on the sale of Nvidia's more advanced chips to China. This internal conflict reflects the broader challenge the U.S. government has faced since the Biden administration in restricting the sale of cutting-edge AI computer chips to China, aiming to safeguard the technological leadership of U.S. companies. China, in turn, has at times responded with its own retaliatory measures, fueling debate over the appropriate extent of these restrictions. The Commerce Department has not yet issued a public response to these allegations or requests for comment.

The controversy surrounding Nvidia, one of the world's most valuable publicly-traded companies, and its critical role in powering artificial intelligence models developed by entities like Open AI and Anthropic, has triggered widespread fallout and intense congressional interest. The split within President Trump's cabinet is just one manifestation of this broader scandal. Axios reported that Commerce Secretary Lutnick received a classified memo earlier this spring, specifically warning about Jensen Huang's relationship with a suspected spy, adding another layer to the mounting concerns.

Numerous members of Congress have announced intentions to investigate Howard Lutnick's actions and have called for his testimony on Capitol Hill. Specifically, Oregon Senator Ron Wyden and Massachusetts Representative Richard Neal, both leading Democrats on the Senate Finance and House Ways and Means committees respectively, sent a letter to Lutnick. They demanded the preservation of all records pertinent to decisions concerning Nvidia chip exports, pending a full investigation.

Wyden and Neal articulated that the Trump administration export policy regarding advanced Nvidia chip exports to China 'raises critical questions about whether and to what extent political considerations are improperly influencing policy decisions made by the Administration.' Republican Senator John Kennedy of Louisiana, a member of the Senate Banking Committee, also expressed his own questions for the Commerce Secretary and urged him to hold a press conference to address the situation.

This article signals heightened political and regulatory scrutiny over US export controls on advanced AI chips to China, particularly concerning potential conflicts of interest and political influence. Lawyers and compliance officers advising technology companies, especially those in the AI sector or with supply chain ties to China, should anticipate increased enforcement, potential new restrictions, and a need for rigorous due diligence regarding export compliance and official relationships. Monitor ongoing congressional investigations for policy shifts.

Source: Original reporting via Associated Press.