A high-level dispute has erupted within the US administration, with Treasury Secretary Scott Bessent reportedly confronting Commerce Secretary Howard Lutnick over the Commerce Department's perceived inaction against Megaspeed, a company accused of illegally diverting advanced American chips to China.
According to sources cited in a recent report, the heated exchange occurred during a White House Situation Room meeting held after the US midterm elections. Bessent directly questioned Lutnick on why Megaspeed had not been placed on the Commerce Department's Entity List, which designates entities posing national security risks. Lutnick reportedly struggled for a response initially, eventually stating he would "look into it."
Allegations Against Megaspeed and Official Warnings
Megaspeed stands accused of illicitly rerouting sophisticated US-made chips, critical for advanced computing and AI, to China. This alleged diversion bypasses US export controls designed to prevent such technology from reaching adversaries. Commerce Undersecretary Jeff Kessler had reportedly received multiple warnings about Megaspeed during deputy-level meetings but deferred the decision to Lutnick, indicating it was the Secretary's prerogative.
Sources suggest Lutnick spent the past year resisting efforts by other administration officials to hold Megaspeed accountable. His reluctance was reportedly driven by concerns that blacklisting the company could escalate trade tensions with China. The Commerce Department, however, has denied that the confrontation between Bessent and Lutnick took place.
Broader Context: Intelligence Concerns and Nvidia CEO
The controversy surrounding Megaspeed unfolds amid growing questions about what President Donald Trump knew regarding intelligence concerns about Nvidia CEO Jensen Huang before his May trip to China. Trump reportedly told The New York Times he was unaware of these concerns prior to the trip. However, a US official and other individuals familiar with the matter informed the newspaper that Secretary of State Marco Rubio briefed Trump aboard Air Force One after learning Huang would be part of the presidential delegation. Trump allegedly proceeded with the plan despite the warning.
Allegations Involving Alice Huang
Secretary Rubio had overseen a confidential intelligence memo circulated to senior administration officials before the presidential visit. This memo reportedly contained assessments that Alice Huang, a Chinese national linked to Singapore-based Megaspeed, had been recruited by China's Ministry of State Security and maintained a close relationship with Jensen Huang.
Nvidia's board has since announced an independent investigation into the matter, to be overseen by independent directors and external counsel. Jensen Huang has pledged his full cooperation with the inquiry.
Frustration Over Export Control Enforcement
This dispute also highlights increasing frustration among national security officials concerning the Commerce Department's enforcement of export controls. Despite pressure from various agencies, the department has reportedly not added a single company to its Entity List in over a year, raising concerns about the effectiveness of current measures to safeguard critical US technology.