Trump administration officials clash over Nvidia incident

Last week, Treasury Secretary Scott Bessant grilled Commerce Secretary Howard Lutnick over his handling of a Singaporean company at the center of revelations about China's espionage campaign against Nvidia, demanding an explanation for why it was not banned from buying advanced U.S. artificial intelligence chips.

The exchange, which took place at the White House on Thursday, highlighted growing tensions within the Trump administration over AI policy in general and the Commerce Department’s stance toward Nvidia in particular, according to people briefed on the matter.

This internal conflict intensified after Nvidia CEO Jensen Huang admitted to having an extramarital affair with a woman who had been involved in running Singapore data center company Megaspeed. According to the New York Times, the Chinese national named Alice Huang has been identified by U.S. intelligence agencies as a spy for the Chinese Ministry of State Security.

Lutnick responded to Bessant by saying the Commerce Department could now move quickly to impose restrictions on Megaspeed, said people briefed on the exchange who spoke on the condition of anonymity because the discussions are private.

A spokesman for the Commerce Department denied that the conversation took place between Bessant and Lutnick. She said whether to include a company on the Entity List is a matter of decision-making at the government-wide level.

The Treasury Department declined to comment.

Since the end of 2022, the United States has imposed restrictions on the direct sale of advanced chips to China. But Megaspeed and other companies have circumvented these regulations by building data centers in Southeast Asia to serve Chinese customers. U.S. officials have also been investigating whether Megaspeed may have illegally transferred the chips to China, a charge Megaspeed denies.

The move to blacklist Megaspeed had been discussed earlier at a meeting of cabinet officials' deputies, where Commerce Undersecretary Jeffrey Kessler delayed the move, saying the matter should be decided by Lutnick.

The confrontation between Bessant and Lutnick was earlier reported by Axios.

In recent months, the debate over how to regulate U.S. technology has increasingly put other departments at odds with Commerce Department officials who oversee rules for technology exports. Megaspeed's purchase of more than $4 billion worth of advanced Nvidia technology has reignited a debate within the government and across Washington about how tight U.S. controls on technology exports should be.

One of the Commerce Department's most powerful rules is the Entity List, a trade blacklist. U.S. companies are prohibited from shipping products to any business on the Entity List without U.S. government permission.

During the first Trump administration and throughout the Biden administration, the government began to use the Entity List more aggressively against the Chinese tech industry. In March last year, the Trump administration also released a large-scale update to the list, adding more than 80 companies and organizations.