Four departments wanted Megaspeed blacklisted for months, Bessent says, but only Lutnick’s Commerce could do it

The question of how America’s most advanced AI chips kept reaching China has a new answer from inside Donald Trump’s cabinet: ask the Commerce Department.

Treasury Secretary Scott Bessent said in a US television interview on Friday (US time) that Treasury, State, Defense and the US Trade Representative had been “in favor of putting Megaspeed on the entity list for months”. The decision, he said, sits with Commerce, which “has the pen”.

The entity list is the US government’s export blacklist. A company on it cannot buy American technology such as Nvidia’s chips without a licence. Megaspeed, based in Singapore, promotes its partnership with Nvidia on its own website.

“Any leakage is very frustrating,” Bessent said, because chips that slip through help China and hurt American AI companies. He said Trump had made it clear China should not receive any Nvidia chips more powerful than the H100.

Why is this blowing up now?

Because of Jensen Huang. Nvidia’s co-founder resigned as chief executive on Thursday after admitting an affair with a former Megaspeed executive, whom US intelligence has been reported to suspect of spying for China. Huang had pushed for years to loosen limits on chip sales to China.

Megaspeed was accused last year of illegally shipping advanced Nvidia chips into China. In December it said there was “no evidence” of such exports. On Thursday it said it takes compliance with US export laws “extremely seriously” and would work with the US government.

Lutnick, meanwhile, faces scrutiny over his reported closeness to Huang and reports that he resisted tighter limits on sales of Nvidia’s more advanced chips to China.

Did Bessent confront Lutnick directly?

Earlier in the week it was reported that Bessent asked Lutnick in a White House Situation Room meeting why he had resisted export controls. A Commerce spokeswoman, Kristen Eichamer, said the two had “no such conversation”.

Asked about it on Friday, Bessent did not deny it. “We don’t repeat conversations in the Situation Room,” he said.

He also widened the target. The bigger question, Bessent said, was whether Nvidia knew its customers and made a serious effort to stop sales to pass-through shell companies, and anyone responsible at the company should be held accountable.

The Commerce Department did not respond to requests for comment on Bessent’s remarks. The White House has stood by Lutnick, describing him in a statement on Thursday as “the most transformative Secretary of Commerce in modern history”.

Why does a cabinet spat matter outside Washington?

Because export controls are the main tool Washington uses to slow China’s AI development, and this fight is about whether that tool was enforced. Cabinet secretaries usually settle disputes like this behind closed doors. A Treasury Secretary pointing at a colleague on live television signals how much political weight the Nvidia affair now carries.

For investors, the timing is awkward. Nvidia shares fell for a sixth straight week to Friday, the longest losing run since 2012, and the company reports its quarterly results on Wednesday morning AWST, its first since Huang’s exit. Any new restriction on who can buy its chips goes straight to its sales forecasts, and Nvidia is held in the global share options of super funds across Australia.

Who will have to answer questions, and when?

Senator Tim Scott, who chairs the Senate Banking Committee, said Huang and Lutnick had been asked to testify next month. Eichamer said Lutnick had agreed to appear voluntarily.

In the House, Huang has been asked to give a closed-door briefing on 1 December, and Nvidia’s general counsel, Tim Teter, a closed-door interview on 2 December. House Foreign Affairs chairman Brian Mast has asked Commerce official Jeff Kessler to appear on 3 December.