Treasury Secretary Bessent Blames Commerce Department for Failing to Blacklist Megaspeed

US Treasury Secretary Scott Bessent has blamed the Commerce Department for failing to properly oversee the export of high-spec Nvidia chips, as the fallout from the scandal widens. He said the department, run by Howard Lutnick, had not done enough to monitor the exports.

Speaking to CNBC, Bessent said several government agencies had been in favour of putting Megaspeed on the entity list for months. Companies on that list are firms that US companies are prevented from working with.

"But Commerce has the pen... and you will have to ask them about their internal process," Bessent added. He said he was frustrated by the delays in putting the company on the export control list and by reports of leakage of AI chips into China.

Megaspeed had been buying advanced chips from Nvidia. It had been probed by US government agencies over suspicions it had been smuggling chips into China, but it is not on the entity list.

At the centre of the affair is Nvidia's former chief Jensen Huang, who left the company after revelations he had an affair with a former Megaspeed executive. That executive has also been alleged to be a Chinese spy.

Bessent said President Donald Trump had made it very clear that China should not receive any Nvidia chips above H100s, so any leakage was very frustrating because it hurt US companies in the AI race and gave the Chinese an advantage.

On CNBC's Squawk Box programme, Bessent also pointed the finger at Nvidia. He said the story so far had been about Jensen Huang's personal foibles, while the real story was whether Nvidia knew its client and made a robust effort to make sure there was no leakage and that it was not selling to what were obviously pass-through shell companies. Anyone at the company responsible should be held accountable, he said.

There is growing pressure on Lutnick from both sides of politics to explain his department's actions. He has been called to testify before the Senate Banking Committee next month over the Commerce Department's role in allowing Nvidia to export its advanced chips. Other congressional committees have also asked Lutnick and his department to keep all records relating to Nvidia and Huang.

Huang has been summoned to testify before the Senate Banking Committee about his affair with the former Megaspeed executive, who is suspected of being a Chinese spy. The committee's chairman, Republican Senator Tim Scott, posted on X that recent reports raise serious concerns about US national security and the protection of sensitive US technology.

Last year, the Commerce Department had been investigating Megaspeed over suspicions it had been smuggling some of Nvidia's advanced AI chips into China, according to the New York Times. Separate reporting in the Financial Times said the department was delaying efforts to have the cloud computing firm included on the list. Megaspeed has been contacted for comment.

Ways and Means Committee Ranking Member Richard E. Neal and Senate Finance Committee Ranking Member Ron Wyden are starting investigations over the way Nvidia was allowed to sell these chips. According to them, Nvidia's advanced H200 chips could be sold to Chinese firms if they were first imported from their manufacturing facility in Taiwan into America for inspection, and a 25% tariff was imposed on those chips.

Neal and Wyden said the tariff was imposed under a section of the Trade Act meant to allow the US president to take action against imports that risk national security. They said Trump's use of the statute appeared to have done the opposite, undermining US national security and putting Americans at risk.