WASHINGTON — US Treasury Secretary Scott Bessent publicly blamed the Commerce Department on Friday, November 13, for failing to blacklist Megaspeed, the Singapore company at the heart of the Nvidia chip scandal, saying four other arms of the US government had favoured putting the firm on the trade blacklist for months while Commerce — the department that actually holds the pen — did not act.

Source: Reuters

Speaking on CNBC's "Squawk Box", Bessent said the Treasury, the Pentagon, the State Department and the US Trade Representative's Office had all favoured adding Megaspeed to the Commerce Department's entity list. "But Commerce has the pen," he said. "You will have to ask them about their internal processes." The Commerce Department did not immediately return a request for comment, Reuters reported.

"Any leakage is very frustrating"

Bessent said he was frustrated both by the delay in listing Megaspeed and by reports of advanced AI chips leaking into China. "I am frustrated when President Trump made it very clear that China should not receive any Nvidia chips above H100s," he said, "and so any leakage is very frustrating because it hurts our great companies in the AI race, because it gives the Chinese an advantage." Asked whether Congress needed to step in on export controls, he replied: "We have all the authorities that we need. They just need to be implemented."

The entity list is the US government's trade blacklist of groups it says pose national security risks; American firms are barred from working with listed companies. Megaspeed, a Singapore-based cloud computing company and a major Nvidia partner, has been investigated by US agencies over suspicions that it smuggled advanced Nvidia AI chips into China, according to reporting by Reuters and The New York Times — suspicions the company has denied. Megaspeed has denied illicit chip shipments, said it operates legally and has pledged to cooperate with US authorities.

Pressure builds on Lutnick

The remarks sharpen the spotlight on Commerce Secretary Howard Lutnick. The New York Times reported on Thursday that Lutnick resisted stronger limits on sales of Nvidia's more advanced chips to China, and the Financial Times has reported that his department delayed efforts to add Megaspeed to the restricted roster. Republican Senator John Curtis said on Friday that "Secretary Lutnick's reported stalling on export controls raises the question of whether the Commerce Department is acting in the best interests of the American people."

CNN reported that Bessent had already challenged Lutnick in a tense Situation Room meeting last week over the department's reluctance to blacklist Megaspeed, and that Trump advisers have discussed a possible ouster of the Commerce Secretary — a discussion CNN attributed to people familiar with the matter and which the White House has not confirmed. CNN said it had reached out to the Commerce Department for comment.

Why this matters beyond Washington

The row lands in the middle of the biggest crisis in Nvidia's history. Chief executive Jensen Huang resigned on Thursday, November 12, after revelations about his personal relationships — including with a former Megaspeed executive whom US media reports describe as suspected by US intelligence of acting for Beijing, an allegation China has rejected as a smear and on which Attorney General Todd Blanche said the Justice Department has drawn no conclusions. Nvidia named chief financial officer Colette Kress interim CEO, and the company has lost about $550 billion in market value in five days, the BBC reported. Senate Banking Committee chair Tim Scott has summoned both Huang and Lutnick to testify in December.

For the wider world — and for the technology supply chains that run through Singapore, Taiwan and China — the Bessent intervention matters because it is a public admission, from the US Treasury Secretary himself, that Washington's chip blockade on China has an enforcement gap: the agencies that wanted the suspected channel closed say the one department empowered to close it did not. What happens next turns on whether Commerce now lists Megaspeed, and on the December congressional testimony, where both Lutnick and Huang are expected to face questions about how advanced American AI chips may have reached China despite the export controls.