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Treasury Criticizes Oversight of AI Chip Exports
Pressure is mounting on US Commerce Secretary Howard Lutnick following public criticism from Treasury Secretary Scott Bessent regarding the department's oversight of advanced artificial intelligence chip exports. The friction centers on the fallout surrounding Nvidia and concerns over chip transfers to China.
Speaking on CNBC, Bessent expressed frustration over delays in placing cloud computing company Megaspeed on the federal export control list. According to Bessent, several government agencies had advocated for restricting Megaspeed for months due to suspicions of chip smuggling, but authority over export restrictions ultimately rests with the Commerce Department. Bessent also questioned whether Nvidia performed sufficient due diligence on shell companies purchasing its products.
Congressional Inquiries and Upcoming Testimony
The controversy follows the departure of Nvidia Chief Executive Officer Jensen Huang after revelations of an affair with an executive linked to Megaspeed who was allegedly acting as a Chinese spy. Reports indicated that government agencies investigated Megaspeed over suspicions of illicit chip transfers, while the Commerce Department delayed placing the firm on restricted lists.
Lawmakers have initiated investigations into the administration's handling of chip trade permissions:
- Senate Banking Committee Chairman Tim Scott announced that Lutnick and Huang are scheduled to testify before the committee in December.
- House Ways and Means Committee Ranking Member Richard E. Neal and Senate Finance Committee Ranking Member Ron Wyden requested the Commerce Department retain all communications and documentation related to Nvidia and Huang.
- Neal and Wyden criticized policies allowing advanced Nvidia H200 chips to be inspected in the US and sold to Chinese firms under a 25 percent tariff, arguing it undermined national security.
Administration Policy and Internal Friction
President Donald Trump previously specified that China should not receive Nvidia processors exceeding the capability of H100 chips to preserve the US lead in artificial intelligence. Bessent noted that any leakage of higher-spec processors undermines American technology firms.
The public dispute represents a rare instance of internal cabinet friction spilling out publicly. Bessent and Lutnick had previously competed for cabinet positions and held differing views on administration trade and tariff policies.
Source: Pressure grows on Trump's Commerce Secretary Lutnick in fallout from Nvidia scandal