A widening controversy centered on unregulated exports of Nvidia’s top-tier artificial intelligence chips has triggered cross-agency finger-pointing and sweeping congressional investigations, with senior Trump administration officials openly criticizing alleged procedural failures that left critical U.S. sensitive technology vulnerable to diversion to China. The scandal first came to public light following revelations that Nvidia CEO Jensen Huang had a personal romantic relationship with a former executive at cloud computing firm Megaspeed, an entity long suspected by U.S. intelligence and trade regulators of acting as a front to smuggle high-performance AI chips into mainland China. Huang has since stepped down from his leadership post at Nvidia in the wake of the disclosures, which also revealed the former Megaspeed executive is under active investigation on allegations of working as a Chinese intelligence operative.
Treasury Secretary Scott Bessent publicly called out the Department of Commerce, led by Secretary Howard Lutnick, for months of inaction that blocked Megaspeed from being added to the federal Entity List, a restricted roster of foreign organizations U.S. firms are prohibited from conducting business with. In a live interview on CNBC’s Squawk Box, Bessent confirmed multiple federal agencies had pushed for Megaspeed’s designation on the restricted list as early as several months prior, but the Commerce Department, which holds exclusive statutory authority to finalize such listings, repeatedly delayed the process without providing clear public justification. Bessent emphasized that the delays have directly undermined explicit White House policy set by President Donald Trump, which bans the transfer of any Nvidia chips more advanced than the H100 model to Chinese entities, noting that unauthorized leakage of these chips not only erodes U.S. competitive edge in the global AI arms race but poses tangible national security risks.
The fallout has now spilled over into Capitol Hill, where bipartisan pressure on Lutnick and his department has intensified dramatically. Secretary Lutnick has been formally subpoenaed to testify before the Senate Banking Committee in December to explain his agency’s decision-making around the Megaspeed case and broader export control enforcement for advanced AI chips. Committee Chairman Republican Senator Tim Scott framed the proceedings as a critical accountability measure, noting that emerging verified reports have raised unprecedented, credible concerns over the protection of America’s most sensitive dual-use technology. Democratic lawmakers on multiple key congressional committees have also demanded the Commerce Department preserve every single record, internal memo, and communication related to Nvidia, Jensen Huang, and the approval processes that allowed the firm to ship advanced chips to entities linked to Megaspeed.
Separate parallel investigations have been launched by House Ways and Means Committee Ranking Member Richard E. Neal and Senate Finance Committee Ranking Member Ron Wyden, who are probing a little-noticed regulatory loophole that allowed Nvidia’s top-tier H200 chips to be legally sold to Chinese buyers. The loophole required the chips, manufactured in Taiwan, to be first shipped to the U.S. for customs inspection, after which a 25% national security tariff under the Trade Act was levied. Neal and Wyden argued that this mechanism, which was originally designed to give the president tools to block high-risk imports, has been weaponized to do the exact opposite, actively facilitating the transfer of cutting-edge AI technology to China and putting U.S. national security and American citizens at avoidable risk.
Bessent also stressed that public discourse has overly focused on Huang’s personal missteps, while the far more critical policy question remains unaddressed: whether Nvidia knowingly did business with suspected pass-through shell companies, and failed to implement rigorous due diligence protocols to prevent unauthorized diversion of its chips. Lawmakers have confirmed Jensen Huang will also be summoned to appear before the Senate Banking Committee to testify under oath about his personal ties to the suspected Chinese intelligence operative, as well as Nvidia’s internal compliance systems for export control rules. Megaspeed has been contacted repeatedly for official comment on the allegations, but has not issued a public statement as of press time.
Bessent blames Lutnick’s Commerce Department for failing to block Megaspeed
