Treasury chief blames Commerce Department for lapses in Nvidia chip export oversight

U.S. Treasury Secretary Scott Bessent said the Commerce Department, led by Howard Lutnick, failed to properly oversee the export of high-spec Nvidia chips after a scandal involving the cloud-computing firm Megaspeed. Bessent told CNBC that several agencies had been "in favour of putting Megaspeed on the entity list for months" but the department did not act promptly.

"But Commerce has the pen... and you will have to ask them about their internal process," Bessent said, indicating that the department must explain its procedures.

The issue stems from investigations that Megaspeed may have smuggled advanced AI chips, including Nvidia's H200 models, into China. Although the firm was under probe, it has not been added to the official list of prohibited entities. Congressional committees have requested that Lutnick and his department preserve all records related to Nvidia and the export of its chips.

Bessent also noted that President Trump has directed that China should not receive Nvidia chips above the H100 level, emphasizing that any leakage could give Chinese firms a competitive edge. He said the delays in restricting Megaspeed are "very frustrating" because they affect U.S. companies in the AI sector.

Both the Senate Banking Committee and other congressional panels plan to summon Lutnick and Nvidia CEO Jensen Huang for testimony. Rankings members Richard E. Neal and Ron Wyden are launching investigations into how Nvidia's chips were allowed to reach Chinese customers, including the use of a 25% tariff under the Trade Act that they say is intended to protect national security.