Lutnick under pressure as Nvidia spying scandal widens
Officials in the Trump administration are questioning the commerce department's handling of the case. Congress is preparing hearings and pressing for limits on chip exports to China.
Key points
- Treasury secretary Scott Bessent blamed the commerce department for not restricting certain Nvidia chip exports to China
- Jensen Huang left Nvidia after reports of several affairs, including one with a woman suspected of being a Chinese spy
- Colette Kress is serving as interim leader of Nvidia
- Howard Lutnick is due to testify before Congress next month
- Lawmakers are pressing for at least four bills on chip exports
Howard Lutnick, the US commerce secretary, is facing growing pressure over the Nvidia spying scandal. According to The Guardian, several officials in the Trump administration have publicly questioned his decisions. Scott Bessent, the US treasury secretary, said the commerce department was responsible for the fact that the US had not placed export restrictions on certain Nvidia chips headed to China.
Jensen Huang left Nvidia on Thursday. The company’s chief financial officer, Colette Kress, has taken over on an interim basis. His departure followed reports of several affairs. The most significant involved Alice Huang, who is suspected of being a Chinese spy. The two share a surname but are not related.
Read also: Ousted Nvidia chief Jensen Huang called to testify before lawmakers
Questions over the commerce department
The Associated Press reported that the administration is weighing whether Lutnick ought to lose his post. A US intelligence report about Huang’s relationship with the suspected spy reached senior figures in the administration. Lutnick is also criticised for the commerce department’s delay in adding Megaspeed, a Singapore-based company, to the list of firms considered a national security risk.
The firm has ties to Alice Huang and spent huge sums, running into billions of dollars, on Nvidia processors over recent years. Bessent told CNBC that he had supported putting the company on the blacklist for months. He said the commerce department held the decision. Asked about it, he told the network that the commerce department would need to explain its internal process.
Senator John Curtis, a Utah Republican, said the delay raised doubts about whether the department was acting in the interests of American people. Senator John Cornyn, also a Republican, called for a thorough investigation and accountability.
Congress moves to respond
The Senate Democratic leader, Chuck Schumer, said Jensen Huang and Nvidia must explain whether US security had been put at risk. He also questioned what the administration did after it learned of the reported relationship. A spokesperson for Lutnick said he had agreed to appear voluntarily before the Senate banking committee.
Senate banking committee chair Tim Scott has written to Lutnick and Jensen Huang asking them to appear. House Democratic leader Hakeem Jeffries said he had requested a classified briefing for all members of Congress. Brian Mast, the House foreign affairs chair, said congressional staff had discussed a date and location for Huang’s testimony with Nvidia.
Reports also say that Trump called Jensen Huang two days before he stepped down, urging him to fight for his job, according to the New York Times. Nvidia’s board statement on his departure did not mention the scandal or the personal conduct reports.
Why the chips matter
Nvidia’s high-end artificial intelligence processors are commonly deployed to create the most advanced AI systems. The company is therefore central to the US competition with China over AI systems. Washington has tried for years to restrict Beijing’s access to these processors, out of concern that China’s armed forces could gain an advantage from them.
House Speaker Mike Johnson said a growing consensus in Congress favoured limiting chip exports to China. According to people familiar with the matter who spoke to Reuters, Chinese AI companies are now seeking Nvidia chip capacity outside China. Some observers worry that American rules on exports could now have a hole in them.
Reaction in China
Beijing has stepped up efforts to build domestic alternatives, including through Huawei. Analysts say Chinese chips still trail Nvidia’s products for training advanced AI models. On Chinese social media, many people expressed surprise at the speed of Huang’s resignation. Reuters reported that news of it drew more than 400 million posts overnight on Weibo.
Huang was a popular figure in China, where his visits drew crowds. The story continues to develop. Lutnick will give evidence to Congress next month, a few days after Huang is due to face lawmakers’ questions on Capitol Hill.
Related: Pressure mounts on US Commerce Secretary Lutnick over Nvidia chip exports
Frequently asked questions
Why is Howard Lutnick under pressure?
Other Trump administration officials have publicly questioned his decisions. Critics say the commerce department delayed adding Megaspeed to a national security blacklist, and White House officials are reportedly discussing whether he should be fired.
Why did Jensen Huang leave Nvidia?
He left after reports emerged of several affairs, most importantly with Alice Huang, who is suspected of being a Chinese spy. Colette Kress has taken over on an interim basis.
Will Congress hold hearings on the scandal?
Yes. Howard Lutnick will give evidence to Congress next month, and Jensen Huang is due to face lawmakersu0026#039; questions on Capitol Hill a few days earlier.
Sources
- The Guardian: Nvidia scandal: US treasury chief blames Lutnick’s commerce department over alleged lack of action
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