Bessent Faults Commerce Over Megaspeed Chip Export Oversight

Several U.S. government agencies were in favour of putting Megaspeed on the export control entity list for months, yet the Commerce Department never did, Treasury Secretary Scott Bessent said on CNBC. Bessent blamed Commerce, run by Secretary Howard Lutnick, for failing to properly oversee the export of high-specification Nvidia chips as the fallout from the Megaspeed scandal widens.

Megaspeed, a cloud computing firm, has been buying advanced chips from Nvidia. U.S. government agencies have probed it over suspicions that it smuggled those chips into China. It is still not on the list of firms that U.S. companies are prevented from working with.

What took so long to add Megaspeed to the entity list?

• Megaspeed remains off the entity list of firms U.S. companies are barred from working with.
• Commerce began investigating Megaspeed last year over suspicions of smuggling some of Nvidia's advanced AI chips into China, the New York Times reported.
• The Financial Times separately reported that the department was delaying efforts to get the cloud computing firm onto the list.
• Bessent says several agencies wanted the designation "for months."

Bessent did not explain the delay himself. He pointed at Commerce's own procedures: "But Commerce has the pen... and you will have to ask them about their internal process," he told CNBC.

Why does the chip leakage matter to Washington?

Because of a threshold President Trump set. "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," Bessent said.

Bessent said he was "frustrated" by delays in putting the company on the export control list and by reports of leakage of AI chips into China. In his framing, chips reaching China hand rivals an edge in the AI race while American companies absorb the damage.

What does Nvidia have to answer for?

Bessent also pointed the finger at Nvidia. The report says Jensen Huang left the company he co-founded after revelations that he had an affair with a former Megaspeed executive. That turned a federal export-control file into a corporate governance story, with the co-founder's private conduct and Nvidia's client vetting running on the same track.

"The story has been thus far of Jensen Huang's personal foibles," Bessent told CNBC's Squawk Box.

"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."

What happens next?

Megaspeed has been contacted for comment. Two questions stay open: whether Commerce moves the company onto the entity list, and whether anyone examines how Nvidia vetted a customer accused of smuggling advanced chips into China.

Until Commerce explains the internal process Bessent said Americans would have to ask about, the gap that let high-specification Nvidia chips reach China stays in place.