Political fallout widens in Nvidia spy scandal

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The political fallout from the Nvidia spy scandal spread to President Donald Trump's cabinet on Friday, as Treasury Secretary Scott Bessent publicly blamed the Commerce Department for failing to blacklist a Singapore company suspected of funneling powerful AI chips to China.

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he political fallout from the Nvidia spy scandal spread to President Donald Trump's cabinet on Friday, as Treasury Secretary Scott Bessent publicly blamed the Commerce Department for failing to blacklist a Singapore company suspected of funneling powerful AI chips to China.

Bessent's comments, a rare rebuke of one cabinet department by another, put new pressure on Commerce Secretary Howard Lutnick. Lutnick has agreed to testify before the Senate amid questions over his department's handling of export controls.

The scandal, which led Nvidia chief executive Jensen Huang to resign on Thursday, has engulfed the company at the heart of the AI boom, a key driver of US economic growth.

It has raised concerns that high-end Nvidia chips reached China, the United States' main AI rival, in violation of Washington's export restrictions.

It has also prompted questions over whether senior Trump administration officials turned a blind eye to Nvidia's dealings with Chinese-linked companies.

Lutnick, a billionaire investor, is a close friend of Trump, who has made Huang one of his closest advisers on artificial intelligence.

As head of the department that oversees US export controls, Lutnick is ultimately responsible for enforcing the rules meant to keep advanced Nvidia processors out of Chinese hands.

Speaking on CNBC, Bessent said Treasury, the Defense Department, the US Trade Representative's office and the State Department had backed adding the Singapore company, Megaspeed, to Washington's trade blacklist "for months."

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