Commerce Depts Lutnick, Kessler under fire over inaction on Nvidias Megaspeed spy fiasco | Latest Tech News
Howard Lutnick’s Commerce Department is dealing with major heat over its failure to crack down on Megaspeed – the Chinese AI firm at the middle of the spy scandal that prompted Nvidia boss Jensen Huang’s shock resignation on Thursday.
Huang was having an affair with alleged Chinese spy Alice Huang, an government at Singapore-based Megaspeed, even as US officers investigated its position in smuggling Nvidia’s best AI chips to China. Last yr, officers discovered that Megaspeed had imported 50,000 more chips than what Nvidia officers discovered at its Singapore-based data facilities.
Rumblings on “bad findings about Megaspeed” swirled within the Commerce Department at least as far back as the summer season of 2025, according to a not too long ago departed former official at the company who spoke to The Post on condition of anonymity.
Commerce Secretary Howard Lutnick speaks at a marketing campaign rally at the Curtis D. Menard Memorial Sports Center in Wasilla, Alaska, Tuesday, Oct. 13, 2026. AP Photo/Alex Brandon
At the same time, Commerce Department staffers had been individually working on a rule that would successfully undo a Biden-era rule on AI chip exports — which Nvidia and Lutnick both dismissed as too stifling — and add a new measure requiring export licenses for superior chip gross sales to sure international locations in Southeast Asia.
The ex-official said that rule was close to being printed as of July of 2025 – but never acquired past Lutnick’s desk.
The official said that the rule, if it had been carried out, would have “substantially mitigated” the power of Megaspeed and other companies housed in Southeast Asia to get hold of Nvidia’s superior AI chips. Nvidia and Jensen Huang had been vocal critics of China-focused curbs on chip gross sales.
“There was a rule that was ready and all of the agencies had signed onto that rule,” the ex-Commerce Department official said. “Lutnick refused to publish it.”
As of Thursday afternoon, senior White House officers are weighing whether or not Lutnick needs to be compelled out as Commerce secretary, GWN reported, citing people acquainted with the matter.
A White House official defended Lutnick in a assertion to The Post.
“Secretary Lutnick is a champion of President Trump’s America First trade and tariff policies, which have secured almost 20 fair trade deals and trillions in manufacturing investments,” the official said. “President Trump maintains complete confidence in the secretary and his ability to carry out the position as the most transformative Commerce secretary in modern history.”
Jeffrey Kessler arrives for a Senate Banking, Housing, and Urban Affairs Committee affirmation listening to in Washington on Thursday, Feb. 27, 2025. Bloomberg via Getty Images
Regardless, Lutnick and top aide Jeffrey Kessler, who oversees export controls as head of Commerce’s Bureau of Industry and Security, will definitely face congressional probes as both events demand solutions and a crackdown on AI export controls.
Sen. John Kennedy (R-La.) – one of more than half a dozen GOP lawmakers to communicate out – told Politico that Lutnick wants to clarify his failure to deal with the issue “in front of God and country.” Elsewhere, Treasury Sec. Scott Bessent reportedly confronted Lutnick in the Situation Room for slow-walking the chip crackdown and not already naming Megaspeed an entity of concern.
“China’s getting access to very large numbers of chips. It’s very significant. I do think the blame for that is squarely on Kessler and ultimately Lutnick,” the ex-official added.
Late Wednesday, The Information reported that the Commerce Department was finalizing a rule that would broaden export controls to seven Southeast Asian international locations including Malaysia, Singapore and Thailand – in a bid to close a loophole that allowed Chinese entities to remotely access Nvidia chips housed in data facilities positioned in those international locations.
Nvidia CEO Jensen Huang delivers a keynote deal with at the Consumer Electronics Show (CES) in Las Vegas on Monday, Jan. 6, 2025. AFP via Getty Images
When reached for remark, a BIS spokesperson confirmed that the company is “actively considering new rules to address remote access with interagency partners.”
“BIS has a strong track record of enforcement across the board, including in cases involving Nvidia and its products,” the spokesperson added.
Commerce’s handling of the Megaspeed matter is nothing short of “stunning,” according to Chris McGuire, senior fellow at the Council on Foreign Relations and former deputy senior director at the National Security Council from 2022 to 2024.
An Nvidia signal is displayed at the company’s headquarters on Thursday, Nov. 12, 2026, in Santa Clara, Calif. Getty Images
McGuire identified that President Trump has constantly said he didn’t need Nvidia’s most superior “Blackwell”-class AI chips to end up in China’s palms, even as he signed off on gross sales of its less-powerful H200 chips to Chinese companies.
“The president has been pretty clear – no Blackwells to China,” McGuire said. “And the way that Commerce is implementing export controls is massively undermining the president’s policy.”
Commerce’s dealings with Nvidia itself behind closed doorways are also under large scrutiny. Earlier this week, Bloomberg reported that Nvidia’s basic counsel Tim Teter instantly called Kessler to ask about the company’s probe into Megaspeed. Specifically, Teter needed to know if BIS had something to do with the detention by Singaporean authorities of Megaspeed’s Alice Huang — the alleged Chinese spy and mistress of Nvidia’s Jensen Huang — in the summer season of 2025.
Alice Huang attends a dinner hosted by Nvidia CEO Jensen Huang at a restaurant in Taipei, Taiwan, Thursday, May 22, 2025. TVBS via AP
The report added that Commerce staffers had been subsequently “muzzled in their ability to look into the company” and told to route requests on the matter through Kessler.
The BIS spokesperson said any considerations that Kessler’s dealings with Nvidia had been inappropriate are “entirely unfounded.” The telephone call between Kessler and Teter occurred after Nvidia instantly contacted BIS staff, who then forwarded the e-mail chain to Kessler.
Kessler then informed BIS staffers to “please continue to handle this case strictly by the book.”
“Kessler’s response to Nvidia was absolutely correct,” the spokesperson added. “He handled the situation impartially and with integrity, as he always does.”
Commerce Secretary Howard Lutnick attends the 9/11 twenty fifth anniversary commemoration ceremony at the National 9/11 Memorial and Museum in New York, Friday, Sept. 11, 2026. Getty Images
An Nvidia spokesperson said the company usually consults with “BIS, [the Office of Export Enforcement], and other officials to answer their questions, provide information we have gathered from the field, request their guidance and instructions, and ask whether they have any follow-ups.”
Meanwhile, sources said Kessler has a repute as a micromanager with an obsessive eye for element – traits that have at occasions made it troublesome for BIS to transfer rapidly on key points.
“There’s a kind of reluctance to act and more of a desire to obtain precise legal fact,” the ex-Commerce official said. “Of course, by the time you do that, the technology’s out the door.”
Nvidia has been making use of immense strain on Commerce not to impose stricter limits – placing company leaders in a bind as they also strive to appease China hawks within the administration, according to Gregory Allen, CEO of Decision Tree Research.
“If you change the policy to allow the exports of the Blackwell legally, then you have to confront the obviousness of being soft on China,” Allen said. “If you simply allow smuggling while denying its existence, then you can claim that you’re still tough on China.”
Stay informed with the latest in tech! Our web site is your trusted source for breakthroughs in artificial intelligence, gadget launches, software program updates, cybersecurity, and digital innovation.
For contemporary insights, skilled coverage, and trending tech updates, go to us usually by clicking right here.
