Commerce Denies Bessent-Lutnick Clash as Megaspeed Blacklist Delay Draws Scrutiny

Sources in that account said White House and intelligence officials had pressed Lutnick and his advisers to act against Megaspeed since fall 2025. They alleged that Lutnick resisted because of concerns about escalating the trade war with China. They also said Jeffrey Kessler, the Commerce undersecretary who leads its Bureau of Industry and Security, repeatedly deferred the issue to Lutnick.

The account says Lutnick received an intelligence memo in May outlining concerns about Megaspeed. Citing earlier New York Times reporting, it also says Kessler stopped an investigation into the company after Nvidia intervened. Separate reporting on congressional scrutiny says Commerce’s investigation was halted last year while the Justice Department continued investigating, according to a person familiar with the matter. The reported enforcement decisions do not establish whether chip smuggling occurred. A person familiar with the matter also said bureau staff had flagged diversion risks in dozens of reports over recent months without meaningful intervention or new restrictions on Nvidia.

The separate account of blacklist deliberations says State, Defense, Energy and Treasury pushed for Megaspeed’s inclusion. One person familiar with the process said Commerce sought over the preceding two months to delay a package of additions while requesting more information about some companies. The report could not establish whether Megaspeed itself was among those companies, but said the delay had kept it off the list.

The reported procedural delay therefore has support separate from the disputed cabinet exchange. The precise reason Megaspeed’s case remains unresolved is less clear.

Megaspeed’s access was already under pressure

Megaspeed was spun off from Chinese gaming group 7Road in 2023. It operates as an Nvidia Cloud Partner, a designation authorizing purchases of the chipmaker’s graphics processors, and provides computing services through mostly leased facilities in Southeast Asia, including Singapore and Indonesia, according to the blacklist report.

Its listed owner is another Singapore company, Swiftdata. Tan Yong Pong is listed as the sole director of both businesses. Alice Huang, a Chinese citizen and former Megaspeed executive suspected of spying for China, was among Megaspeed’s directors until November 2023.

Scrutiny intensified after revelations of her affair with Jensen Huang, Nvidia’s founder and chief executive. Nvidia’s chips supply computing power used to develop advanced AI, making their availability a national security concern. The affair does not itself establish illegal chip diversion or espionage.

The diversion concerns predate those revelations. In an October 2025 account of a congressional letter, Republican Senator Tom Cotton asked Lutnick’s department to investigate Megaspeed. Cotton had previously introduced legislation that would require location verification of chips after sale.

The letter cited a New York Times investigation alleging that Megaspeed funneled Nvidia chips to Malaysia and Indonesia, where they appeared to serve customers in China remotely. The account describes access to computing from abroad, rather than establishing that the hardware physically entered China.

At the time, Nvidia said it had engaged with the U.S. government, conducted its own inquiry and found no reason to believe products had been diverted. Singapore police confirmed an investigation into suspected breaches of domestic law.

Nvidia now says, in a statement carried by the blacklist report, that it placed Megaspeed on its own block list in June 2025, prohibiting further sales or shipments, and that the block remains in place. The report also says international data center operators ended or reconsidered leases after smuggling allegations, forcing Megaspeed to relocate or terminate hardware deployments. Megaspeed continues operating in Singapore under heavy regulatory scrutiny.

Its absence from the Entity List consequently does not establish continued Nvidia shipments or uninterrupted access to data center facilities.

Bureau of Industry and Security guidance compares diversion-risk notifications with licensing requirements under letters and public screening lists. Source: Bureau of Industry and Security.

What formal restrictions would add

Commerce chairs the interagency committee that decides Entity List additions, alongside State, Defense and Energy. Treasury can participate without being a formal member. Listing would put a government licensing requirement on technology exports to Megaspeed, extending beyond Nvidia’s voluntary commercial block.

Blacklisting is also not the only available mechanism. Nvidia said in the statement describing its block that Megaspeed was not subject to an “is informed” letter. Such letters notify recipients of a license requirement. The bureau’s July 2024 industry guidance explains that it uses notifications about diversion risks beyond its public screening lists, and that licensing requirements depend on the items, destinations, end uses and end users involved. Being absent from the Entity List is not a blanket exemption from export controls.

Commerce declined to discuss internal Entity List deliberations in the blacklist report. It defended its broader enforcement record, citing six investigations producing criminal charges against 17 defendants involving billions of dollars in smuggled chips. Those are department-wide figures, not results attributed to Megaspeed.

The account of the cabinet exchange separately says a review of the Federal Register found no Entity List additions in more than a year. Criminal investigations and blacklist additions are different enforcement measures: prosecution totals do not explain the reported delay, while that delay alone does not establish that all enforcement has stopped.

The next test is in Commerce and Congress

Republican chairs of the House Foreign Affairs, Intelligence and China committees have sought Jensen Huang’s participation in a November 18 closed-door briefing that could lead to an investigation, according to the report on lawmakers’ response. Nvidia’s board has decided to investigate its chief executive. Trump has defended him, saying he believed Huang did not know the woman was an alleged spy.

The legislative push comes after Democrats won the midterms and secured coming majorities in Congress. Lawmakers from both parties are pressing for tighter chip restrictions through the annual defense policy bill. One proposal, the AI Overwatch Act, would let Congress review licenses for advanced AI chip sales to China and other countries of concern. Some technology lobbyists have used the controversy in private defense-bill negotiations to argue for greater government control over chip access, according to three people involved in the talks. The policy push therefore concerns the wider allocation of export authority, as well as Megaspeed.

The immediate questions are whether Commerce advances formal restrictions and whether Congress changes the licensing process. Establishing responsibility will require evidence about any unlawful diversion, what Nvidia and officials knew, and why the restrictions sought by other agencies have not been imposed. The reported confrontation, even if corroborated, would not answer those questions on its own.

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