US Treasury chief blames Commerce Department for not restricting Nvidia chip exports

US Treasury Secretary Scott Bessent criticized Nvidia and Commerce Secretary Howard Lutnick for apparent lack of controls in identifying potential spying activities within the chip export system. During an interview with CNBC, Bessent alleged there was significant leakage in the chip export system and the Trump administration was actively working to address these gaps.

Bessent stated that his department had advocated for placing Megaspeed on the US entity list for months. However, the responsibility of managing this list lies with the Commerce Department, and the Federal Trade Commission (FTC) could potentially take action. OFAC (Office of Foreign Assets Control) does not have control over such export decisions; it is a Bureau of Industry and Security (BIS) decision, and the FTC might add companies to their restrictive list.

Megaspeed's controversy came to light after reports emerged of a relationship between Jensen Huang and former Megaspeed executive Alice Huang, who US authorities suspect of being a Chinese spy. US lawmakers have called for stricter restrictions on China's access to advanced AI chips following this scandal, which threatens to implicate some Trump administration members, including Commerce Secretary Howard Lutnick.

Bessent emphasized that individuals within the company should be held accountable for potential leakage issues. He questioned whether Nvidia was aware of their client's identity and if there was a robust effort to ensure no leakage, adding that any such actions should be taken seriously.

Regarding the role of Congress, Bessent mentioned that the necessary authorities for export controls were already in place; they simply needed to be implemented. This development follows Nvidia CEO Jensen Huang's resignation on Thursday, following allegations of two alleged affairs involving a Chinese businesswoman suspected by US authorities of spying for Beijing. Huang's resignation was announced by the Board of Directors, effective immediately.

Following the resignation, Nvidia's CFO, Colette Kress, will take over as interim CEO while the company searches for a permanent successor. Huang, who co-founded Nvidia and holds a 3.61% stake in the company, will also step down from the board. The company's board met on Wednesday to consider his removal, following reports of his alleged extramarital affair with a senior executive.