US Treasury Secretary Scott Bessent has blamed Howard Lutnick's Commerce Department for failing to properly oversee the export of high-spec AI chips, as the fallout from the Nvidia scandal widens to President Donald Trump's cabinet.
Pressure is building on Lutnick from across the political spectrum to explain his department's actions.
Jensen Huang was ousted as Nvidia CEO after revelations he had an affair with a businesswoman who was also allegedly a Chinese spy.
Megaspeed, the firm she worked for, had been probed by US government agencies over suspicions it was smuggling Nvidia chips into China, reports said, but it is not on a list of firms US companies are prevented from working with.
Bessent told CNBC several agencies "were in favour of putting Megaspeed on the entity list for months".
"But Commerce has the pen... and you will have to ask them about their internal process," he added.
Bessent's comments come after Lutnick was called to testify before the Senate Banking Committee next month over the Commerce Department's role in allowing Nvidia to export its advanced chips.
Other congressional committees have asked both Lutnick and his department to retain all records relating to Nvidia and Huang.
Bessent said he was "frustrated" by delays in putting the company on the export control list and reports of leakage of AI chips into China.
"President Trump made it very clear that China should not receive any Nvidia chips above H100s, so any leakage is very frustrating because it hurts our great companies in the AI race, because it gives the Chinese an advantage," he said.
Last year, the Commerce Department had been investigating Megaspeed over suspicions it had been smuggling some of Nvidia's advanced AI chips into China, according to the New York Times. Megaspeed has been contacted for comment.
There was also pressure on the Commerce Department to add it to the list, but separate reporting in the Financial Times said the department was delaying efforts to have the cloud computing firm included.
However, Bessent also pointed the finger at Nvidia.
"The story has been thus far of Jensen Huang's personal foibles," he told CNBC's Squawk Box programme, external.
"The real story here should be: Did Nvidia know their client, and was there a robust effort at Nvidia to make sure that there was no leakage and that they were selling to what were obviously pass-through shell companies?
"It's important that anyone at the company there be held accountable for that."
Bessent's pointed comments are a rare instance of internal debate within the Trump administration spilling out into the public view, although tensions have reportedly simmered between Bessent and Lutnick in the past.
In 2024, the two reportedly jostled for the role of treasury secretary ahead of Trump's return to the White House, and last year the pair butted heads over the administration's tariff policy, according to US media.
Huang has been summoned to testify before the Senate Banking Committee about his alleged affair with the former Megaspeed executive, who is suspected of being a Chinese spy.
The commerce secretary has also been summoned to appear before the committee in December.
"Recent reports raise serious concerns about our national security and the protection of sensitive US technology," committee chairman, Republican Senator Tim Scott posted on X.
Democrats on key congressional committees have asked the Commerce Department and Lutnick to keep all records relating to decisions to allow Nvidia to sell its advanced AI chips to Chinese companies, including all their communications with or about Nvidia and Jensen Huang.
Ways and Means Committee Ranking Member Richard E Neal and Senate Finance Committee Ranking Member Ron Wyden are starting investigations into the way Nvidia was allowed to sell these chips.
According to Neal and Wyden, Nvidia's advanced H200 chips could be sold to Chinese firms if they were first imported from their manufacturing facility in Taiwan into America for inspection.
A 25% tariff - a levy that is paid to the federal government - was imposed on those chips, under a section of the Trade Act that Neal and Wyden say is meant to allow the US president to take action against imports that risk national security.
"Trump's use of the statute appears to have done the opposite, undermining US national security and putting Americans at risk," they said.
