Bessent blames Lutnick's Commerce Department over Nvidia chip 'leakage' to China
Treasury Secretary Scott Bessent said Friday that four agencies had favored putting Megaspeed on the U.S. entity list 'for months' — but only the Commerce Department could act, and it did not.
'Commerce has the pen'
Treasury Secretary Scott Bessent told CNBC's 'Squawk Box' on Friday that four government agencies had favored putting Megaspeed, the Singapore-based company at the center of the Nvidia scandal, on the U.S. entity list 'for months' — but that only the Commerce Department could act. 'Commerce has the pen,' Bessent said. 'You will have to ask them about their internal processes.'
The departments of Treasury, Defense and State and the Office of the U.S. Trade Representative were all in favor of adding Megaspeed to the list, Bessent said. The entity list is a trade blacklist run by Commerce's Bureau of Industry and Security: companies on it need licenses to receive American technology. Bessent added that Treasury's sanctions office has no control over export decisions, and that the Federal Trade Commission could possibly take other action, Reuters reported.
The Situation Room dispute
Bessent's comments followed an Axios report that he had confronted Commerce Secretary Howard Lutnick in the White House Situation Room last week, asking why Lutnick had resisted export controls, especially on Megaspeed. Axios reported that Lutnick has 'repeatedly stood in the way' of cracking down on companies suspected of diverting Nvidia's advanced AI chips to China. A Commerce spokeswoman, Kristen Eichamer, told CNBC on Wednesday that Bessent and Lutnick had 'no such conversation' in the Situation Room, and the department did not immediately respond to a request for comment on Bessent's remarks.
Commerce has not added a company to the entity list in more than a year, according to reports. Bessent said the administration is working to shut down what he called 'a lot of leakage in the system' of chips reaching China. President Donald Trump had made it 'very clear that China should not receive any Nvidia chips above H100s,' Bessent said, adding that any leakage 'hurts our great companies in the AI race [and] gives the Chinese an advantage.'
- Agencies favoring Megaspeed listingFour agencies
- Commerce entity-list additionsnone in more than a year (reported)
- House closed-door briefingDecember 1
- Senate Banking testimonynext month
- Nvidia shares, Friday morning-4.36%
The question turns to Nvidia
The dispute follows the resignation of Nvidia chief executive Jensen Huang on Thursday, after he admitted to an affair following scrutiny of his relationship with Alice Huang, a Megaspeed executive whom U.S. intelligence reportedly determined to be a Chinese spy. Huang, seen as one of Trump's closest corporate allies, had pushed the U.S. government to ease restrictions on exports of advanced AI chips to China. In December, Trump said Nvidia could sell its powerful H200 chips to approved Chinese customers, provided the U.S. gets a percentage of the sales.
Bessent framed the real question as whether Nvidia vetted its customer. 'Did Nvidia know their client?' he asked, questioning whether the company made a robust effort to prevent leakage and avoid selling to what he called 'obviously pass-through shell companies.' Huang and Lutnick have both been asked to testify before the Senate Banking Committee next month, Senator Tim Scott said Thursday, and Huang has separately been asked to sit for a closed-door briefing before multiple House committees on December 1. Nvidia shares were down 4.36% in Friday morning trading, according to market data shown with the CNBC report.
