Treasury Secretary Scott Bessent publicly accused the Commerce Department on Friday of delaying action against a company at the center of the Nvidia chip scandal, in an unusually open clash between two of President Donald Trump's Cabinet secretaries that has now fueled talk of Commerce Secretary Howard Lutnick's dismissal.
The dispute centers on Megaspeed, a Singapore-based Nvidia customer that U.S. officials suspect of diverting advanced American computer chips to China. Bessent said on CNBC's "Squawk Box" that four government agencies had favored placing Megaspeed on the Commerce Department's export blacklist for months, but that Commerce, which controls the list, never acted. The comments came a day after Nvidia chief executive Jensen Huang resigned amid revelations about his relationship with a former Megaspeed executive whom U.S. intelligence suspects of being a Chinese spy.
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| Treasury Secretary Scott Bessent in a file photo. Bessent said Friday that four agencies backed blacklisting Megaspeed for months, but the Commerce Department never acted. (Fox Business) |
A Public Rebuke on Live Television
Bessent did not hide his frustration. Speaking on CNBC on Friday morning, he said the Treasury Department, the State Department, the Pentagon and the U.S. Trade Representative's office had all supported adding Megaspeed to the Commerce Department's so-called entity list, the roster of foreign companies that American firms are barred from doing business with on national security grounds.
"Commerce has the pen. You would have to ask them about their internal processes," Bessent said, according to CNN and the Associated Press. "My deputy has been pushing this for months."
The Treasury secretary said the delay cut against a direct instruction from the president. Trump, Bessent said, "made it very clear that China should not receive any Nvidia chips above" a certain technological level. "And so any leakage is very frustrating because it hurts our great companies in the AI race, gives the Chinese an advantage," he added.
It is rare for one Cabinet secretary to criticize another by name on national television, and rarer still to do so over a matter of national security. Bessent's remarks were the most public airing yet of a blame game that, according to CNN, has been building inside the administration since Huang's resignation.
The Company at the Center: Megaspeed
Megaspeed International is a Singapore-based cloud computing firm and a major customer of Nvidia, the world's most valuable technology company and the dominant maker of the advanced chips that power artificial intelligence systems. According to the Associated Press, Megaspeed has reportedly purchased more than $4 billion worth of Nvidia's advanced semiconductors, and U.S. officials have long harbored concerns that the company has funneled those chips into China in circumvention of American export controls.
The Commerce Department's Bureau of Industry and Security began investigating Megaspeed in 2024. The Justice Department's national security division is also investigating whether the company violated U.S. export control laws, according to a person familiar with the matter cited by the AP. Megaspeed has denied wrongdoing, saying previously that there was "no evidence" it had shipped advanced chips into China. China has denied the spying allegations.
The case burst into the open this week after the New York Times reported that Huang had an affair with Alice Huang, a former Megaspeed executive whom U.S. intelligence suspects of being a Chinese spy. Jensen Huang resigned as Nvidia's chief executive on November 12, sending shockwaves through the technology industry and the markets. Nvidia has not been accused of wrongdoing, but Bessent widened the scope of accountability on Friday, demanding that the company explain whether its customer vetting systems had failed.
"I think there are a lot of holes in the system, and we are constantly working to plug them," Bessent said when asked whether Nvidia's most advanced chips had flowed into China through Megaspeed.
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| Commerce Secretary Howard Lutnick in an official portrait. His department controls the export blacklist at the center of the dispute, and some Trump advisers have discussed whether he should be dismissed, according to CNN. |
The Situation Room Confrontation
Bessent's television appearance was not the first time he had pressed the issue. CNN previously reported that in a tense meeting in the White House Situation Room last week, Bessent challenged Lutnick over his department's reluctance to blacklist Megaspeed. Asked about that confrontation on Friday, Bessent declined to recount conversations held in the Situation Room.
The New York Times reported on Thursday that Lutnick had resisted placing greater limits on the sale of Nvidia's more advanced chips to China, even as other agencies pushed for tougher action. Despite the warnings from Treasury and other agencies, Commerce has so far refused to put Megaspeed on the entity list, according to people familiar with the matter cited by CNN.
The Commerce Department did not immediately respond to messages seeking comment on Friday, the AP reported. A Commerce spokesperson previously pushed back on the account of the Situation Room meeting, according to reports.
The standoff has drawn in Congress as well. Republican Senator John Curtis said on Friday that "secretary Lutnick's reported stalling on export controls raises the question of whether the commerce department is acting in the best interests of the American people." Lutnick has been called to testify before the Senate Banking Committee in December to explain the Commerce Department's role in allowing Nvidia to export its most advanced chips, and Huang is also scheduled to appear, according to reports.
Ouster Talk Around Lutnick
The public rebuke has raised the stakes for Lutnick himself. CNN reported on Friday that some of Trump's advisers, reeling from the fallout of Huang's resignation, have begun discussing whether Lutnick should be dismissed. No decision has been reported, and the White House has not commented publicly on Lutnick's future.
Lutnick, a former Wall Street chief executive, has been one of the administration's most prominent economic voices, leading trade negotiations and the push to bring manufacturing back to the United States. But the chip scandal has put his handling of export controls under a harsh light, and the criticism is now coming not only from Democrats and outside experts but from inside the president's own Cabinet.
The episode also lands at a sensitive moment for the administration's China policy. Trump is preparing to travel to China next week for a summit with Chinese President Xi Jinping and Russian President Vladimir Putin, where nuclear weapons and trade are expected to dominate the agenda. A public fight over whether American chips are reaching Beijing undercuts the administration's message that it is winning the technology race with China.
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| An Nvidia graphics processing unit on a circuit board. Megaspeed reportedly bought more than $4 billion worth of Nvidia's advanced chips, which U.S. officials suspect were diverted to China. |
What This Means
The Bessent-Lutnick clash matters for three reasons. First, it exposes a genuine policy split at the top of the administration over how aggressively to police the flow of American technology to China. The entity list is the government's sharpest tool for cutting off suspect buyers, and the fact that four agencies backed using it for months while Commerce held back suggests a disagreement that goes beyond personalities.
Second, it puts the spotlight on enforcement rather than rules. The United States already restricts the sale of its most advanced chips to China. The Megaspeed case, as described by Bessent, is about whether those restrictions are actually being enforced when a major customer with a history of large purchases sits in a gray area. If chips worth billions of dollars can reach China through intermediaries, the controls are only as strong as the willingness to use them.
Third, it tests the president's tolerance for open Cabinet warfare. Trump has historically moved quickly against officials who become public liabilities, and the combination of a public rebuke from a fellow secretary, congressional criticism and talk of dismissal leaves Lutnick in a visibly weakened position. At the same time, Lutnick remains a close Trump ally, and the president has not signaled any move against him.
What Happens Next
December is set to bring the first formal accounting. Lutnick is due before the Senate Banking Committee, where lawmakers are expected to press him on why Megaspeed was never added to the entity list despite months of pressure from other agencies. Huang's scheduled appearance at the same hearings will add further scrutiny to how Nvidia vetted one of its biggest customers.
Investigations into Megaspeed continue on two fronts: the Commerce Department's export-control probe and the Justice Department's national security inquiry. Whether Megaspeed is ultimately added to the entity list, and whether any charges follow, will determine how much of the scandal becomes a matter of law enforcement rather than politics.
For now, the administration's internal fight is out in the open, and the question hanging over Washington is whether the president sides with the Treasury secretary who went public, or with the Commerce secretary who held the pen.
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