The simple way to sum up Treasury Secretary Scott Bessent’s remarks about the Nvidia scandal on Friday is that he threw Commerce Secretary Howard Lutnick under the bus.
“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?” Bessent said on CNBC. “I think it’s important that anyone at the company there be held accountable for that.”
In the wake of Jensen Huang’s resignation Thursday as Nvidia CEO amid reports that he had an affair with a woman U.S. intelligence reportedly had assessed to be aligned with the Chinese government, many are asking why the Singapore-based company she represented, Megaspeed, was not vetted, investigated or barred from U.S. transactions. That’s what has happened with many companies and institutes thought to be affiliated with hostile intelligence services. But since President Donald Trump returned to office, the notion that national security should take precedence over personal interests has been cast aside.
Nvidia, much in the news lately, is the dominant provider of advanced chips that fuel artificial intelligence. Because of concerns that China could use the chips to develop weapons or otherwise overtake the U.S. in the realm of AI, Nvidia’s most advanced chips are banned from being sold to Chinese companies.
Under normal circumstances, the Commerce Department’s Bureau of Industry and Security would conduct a rigorous inquiry.
Part of what’s been playing out in headlines is a conflict among Trump administration officials, who have reportedly clashed “over how to regulate sales of advanced technology, particularly Nvidia’s chip sales to Asia,” according to The New York Times. Lawmakers want to question Huang — who has said he revealed no information that could be of intelligence value — but more concerning are the actions, or really the inaction, of U.S. officials, including Trump.
Under normal circumstances, the Commerce Department’s Bureau of Industry and Security would conduct a rigorous inquiry, often with the help the federal law enforcement and intelligence, to determine whether risk justified banning Megaspeed from buying or selling U.S.-produced components. That’s what has occurred with Chinese technology companies, including Huawei, ZTE and dozens upon dozens of other PRC-based corporations. But according to the Times, Lutnick’s deputy, who often worked with Nvidia, shut down an investigation into Megaspeed. The natural question is whether this had anything to do with how much money Lutnick’s family has earned due to assistance it provided businesses connected to Nvidia in their data center deals.
When informed of Jensen’s vulnerabilities a year ago, the Times reported Monday, Trump chose not to act, possibly out of concern over potentially disrupting trade with China. Reportedly told in May — while en route to a summit with Chinese leader Xi Jinping — that Huang was involved with a woman U.S. intelligence had determined was a Chinese spy, Trump still invited Nvidia’s then-CEO to attend meetings with him in Beijing.
Trump initially said he hadn’t heard about the affair and claimed not to have seen the memo Secretary of State Marco Rubio, who is also national security adviser, prepared on the matter. Then the president prevaricated, saying he would have to check whether such a briefing had been delivered to him.
This series of events suggests that the U.S. president was told about a counterintelligence threat involving someone connected to U.S.-Sino relations and the development of cutting-edge technology with military applications — and did not care. If he truly cannot recall a briefing about a foreign power targeting one of the most significant corporate executives in his orbit, that itself suggests something incredibly worrisome about Trump ignoring his own advisers’ warnings.
Since the scandal broke, Trump has not publicly grappled with the potential damage: what Alice Huang (no relation) may have learned about Nvidia or the officials with whom Jensen Huang regularly communicated; whether the chips needed for AI development reached China as a result of her and Jensen’s lobbying; or whether U.S. export control laws were explicitly ignored. No, Trump’s public remarks have focused on another billionaire’s feelings and reputation. Faced with a spy scenario, the president shrugged.
To be fair, even the best leaders sometimes stumble on behalf of friends and acquaintances. But national interests and security should trump politicians’ proclivities. China denied initial reports that Alice Huang is a spy, calling the allegations an attempted smear. Megaspeed has denied illegally diverting chips to China, the Times reported.
Standard operating procedures developed by U.S. intelligence and law enforcement communities suggest that Huang should have received a defensive briefing about the person he was involved with and the people to whom she allegedly reported. It matters that this never happened — especially if the reason was that Trump’s relationships with a powerful CEO and Beijing’s leader crowded out legitimate counterintelligence concerns.
Of course, officials may have feared that warning Huang could reveal what the U.S. knew about Chinese intelligence services’ operation, and possibly tipped off Alice Huang. That may explain some caution last year. But it cannot explain flying Huang to Beijing aboard Air Force One, nor can it explain the president publicly vouching for Huang while Nvidia’s own board was still investigating his actions. Protecting a surveillance operation is a reason for silence, not cheerleading.
So far, the bipartisan reaction to this scandal suggests lawmakers understand that an intelligence operation potentially aimed at America’s AI supply chain and the personnel managing it is cause for alarm. That the president seems not to realize this should be cause for alarm, too.
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