Pressure mounts on US Commerce Secretary Lutnick over Nvidia chip exports
Treasury Secretary Scott Bessent says the Commerce Department fell short in overseeing exports, while lawmakers from both parties open inquiries into the sales.
Key points
- Treasury Secretary Scott Bessent blamed the Commerce Department, led by Howard Lutnick, for weak oversight of Nvidia chip exports.
- Jensen Huang was ousted as Nvidia CEO after reports of an affair with a businesswoman allegedly linked to Chinese spying.
- Megaspeed has been probed over suspected smuggling of Nvidia chips into China but is not on the entity list.
- Lutnick and Huang are both due to testify before the Senate Banking Committee, with Lutnick's appearance set for December.
- Democrats Richard E. Neal and Ron Wyden have launched investigations into the sale of advanced H200 chips.
According to the BBC, US Treasury Secretary Scott Bessent has put responsibility on the Commerce Department for weak supervision of advanced Nvidia chip shipments abroad. The scandal is still spreading. Lutnick faces mounting scrutiny from lawmakers across the political spectrum, who want him to account for his department’s conduct.
The affair story began when Jensen Huang lost his job as Nvidia chief executive. Reports revealed he had been involved with a businesswoman, who is alleged to have been a Chinese spy. She worked at Megaspeed, a company that US government agencies investigated over claims it moved Nvidia chips into China. Reports say Megaspeed does not appear on the list of firms American businesses are barred from dealing with.
Read also: Ousted Nvidia chief Jensen Huang called to testify before lawmakers
Bessent points at the Commerce Department
Speaking to CNBC, Bessent said several agencies had backed adding Megaspeed to the entity list for a long period. He added that the Commerce Department holds the final decision, so questions about how it reached that choice should go to the department itself. He also voiced irritation at the slow pace and at reports that AI chips were reaching China.
Bessent cited President Donald Trump’s position that Nvidia chips above the H100 generation should be kept from China. In his view, any leak undercuts American firms competing in artificial intelligence by handing Chinese companies an edge.
According to the New York Times, the Commerce Department opened an inquiry into Megaspeed last year over suspected smuggling of certain advanced Nvidia AI chips. Separate reporting from the Financial Times indicated that officials were dragging their feet on adding the cloud computing company to the list. Megaspeed was approached for comment.
Bessent also criticises Nvidia
Bessent did not limit his criticism to the government. He told CNBC’s Squawk Box that coverage has concentrated on Huang’s private behaviour. In his view, the central questions are whether Nvidia understood who its buyers were and whether it made a serious attempt to stop chips reaching what he called pass-through shell companies. He insisted that people at the company responsible must face consequences.
Congress opens inquiries
The Senate Banking Committee has summoned Lutnick to give evidence in the coming month. The hearing will examine his department’s part in permitting Nvidia to export advanced chips. Huang has also been summoned to testify to the same committee. Committee chairman Tim Scott, a Republican senator, posted on X that recent reports pose a threat to American security and to sensitive technology.
Other committees have asked Lutnick, his department and Nvidia to preserve every document connected to Nvidia and Huang. Democrats Richard E. Neal and Ron Wyden have opened probes into how the chip sales were approved. They say H200 chips might have reached Chinese buyers if they first travelled from Taiwan, where they were made, into the United States for checks.
A 25% charge, collected by the federal government, was applied to those chips under a clause of trade law designed to let the president respond to imports that endanger national security. Neal and Wyden argue that the president’s use of this clause seems to have produced the opposite result, weakening US security and exposing Americans to risk.
Related: Democrats open probe into Nvidia China chip sales and Trump ties
Frequently asked questions
Why is Commerce Secretary Howard Lutnick under pressure?
Treasury Secretary Scott Bessent has put responsibility on his Commerce Department for weak supervision of Nvidia chip exports. Lutnick has also been summoned to give evidence before the Senate Banking Committee in the coming month.
Why did Jensen Huang leave Nvidia?
Huang was removed as Nvidia chief executive after disclosures about a romantic relationship with a businesswoman, who is alleged to have been a Chinese spy. He has also been summoned to testify before the Senate Banking Committee.
What is Megaspeed and why is it involved?
Megaspeed is the firm the businesswoman worked for. US agencies had probed it over suspicions it smuggled Nvidia chips into China, but reports say it is not on the entity list.
Sources
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