Scott Bessent Blames Howard Lutnick Over Nvidia Spy Scandal and Megaspeed Chip Exports

Treasury Secretary Scott Bessent has pointed the finger at Commerce Secretary Howard Lutnick over the Trump administration’s failure to blacklist Singapore-based Megaspeed, a major Nvidia customer under investigation over alleged diversion of advanced AI chips to China.

Speaking to CNBC on Nov. 13, Bessent said several government agencies had supported placing Megaspeed on the US government’s Entity List for months, but the decision rested with the Commerce Department.

His comments have intensified scrutiny of Lutnick and exposed divisions within the administration over China’s access to advanced American AI technology.

“There was coordination,” Bessent said, referring to support from the Treasury, War, State, and US Trade Representative offices.

“The pen is in Commerce so I’d point you there,” he added.

Bessent Puts Lutnick’s Commerce Department Under Pressure

The comments followed reports that Bessent challenged Lutnick during a Nov. 5 meeting in the White House Situation Room over why Megaspeed had not been placed on the Entity List.

During the meeting, Lutnick reportedly said he did not know why the company had not been listed and would ‘look into it’. The reported exchange raised further questions about the department’s handling of the case.

Bessent has not confirmed all the details of the reported confrontation, but his CNBC remarks made clear that Commerce controlled the listing process.

The Commerce Department has disputed reports of a confrontation between the two secretaries.

Why Megaspeed Is Attracting US Attention

Megaspeed has attracted U.S. scrutiny over allegations that advanced Nvidia processors purchased by the Singapore-based company could have been diverted to unauthorized Chinese customers.

The company reportedly purchased billions of dollars’ worth of Nvidia hardware in recent years. Investigators have examined whether the equipment or computing capacity was subsequently made available to restricted Chinese entities.

The controversy has also focused attention on former Megaspeed executive Alice Huang, whom US intelligence officials reportedly suspect of having links to Chinese intelligence. However, the allegations have not been established as proven espionage.

Singapore’s Ministry of Home Affairs clarified that Alice Huang was not investigated for espionage. She was investigated over suspected offences involving possible false declarations connected to Megaspeed’s server purchases and exports.

Authorities subsequently found insufficient evidence to establish those offences, although investigations into Megaspeed and six other individuals remain ongoing.

Megaspeed has maintained that it takes its US export-control obligations seriously and has cooperated with inspections. China has also rejected the espionage allegations.

Impact of Entity List Restrictions

The Entity List is maintained by the U.S. Department of Commerce and identifies foreign organisations considered potential threats to national security or US foreign policy interests.

Companies added to the list face licensing requirements for exports, reexports, and transfers of controlled U.S. technology. Obtaining approval can be difficult, making the list a powerful tool for restricting access to American products.

Placing Megaspeed on the list could significantly limit its ability to acquire Nvidia processors through legitimate channels. Commerce chairs the interagency process responsible for such decisions, giving Lutnick’s department a central role.

The delay has raised questions about whether commercial interests and relations with Beijing have influenced decisions over national security restrictions.

Bessent Questions Nvidia’s Export Safeguards

Bessent’s criticism has also extended to Nvidia, raising questions about whether the company adequately checked its customers and prevented advanced processors from reaching unauthorized destinations.

The concern is whether existing safeguards can track powerful chips after they are sold to overseas customers, particularly when intermediaries or shell companies could be used to bypass restrictions.

Nvidia has faced scrutiny over its customer checks and the possibility that its technology reached restricted Chinese entities. Bessent has argued that companies should be held accountable if their safeguards fail to prevent illegal diversion.

He also maintained that the U.S. government already has sufficient legal powers to enforce export controls and needs to apply them effectively.

Lutnick Faces Congressional Pressure

The controversy has attracted congressional scrutiny, with Senate Banking Committee Chairman Tim Scott requesting testimony from Lutnick and Nvidia leadership over the handling of advanced chip exports.

Lutnick has agreed to testify voluntarily before the committee, with his appearance requested for Dec. 3. Nvidia’s leadership has also been asked to appear.

Meanwhile, the White House has publicly expressed confidence in Lutnick, and no official decision to remove him has been announced.

The dispute highlights the Trump administration’s challenge in balancing commercial interests and relations with China against concerns that advanced American AI technology could reach restricted overseas customers.

Bessent’s remarks have placed Commerce’s handling of Megaspeed under greater scrutiny. The central question is why the company remained off the Entity List despite reported support for restrictions from multiple agencies, and whether Washington can close potential export-control loopholes before more sensitive technology reaches unauthorized users.