Nvidia CEO’s Resignation Sparks Scrutiny of Commerce Department’s Handling of AI Chip Sales
Critics say Howard Lutnick, the U.S. commerce secretary, and his department have shielded Nvidia as concerns grew over AI chip sales to firms like Megaspeed.
Howard Lutnick has long clashed with top officials over regulating sales of advanced technology, particularly Nvidia’s chip sales to Asia. This has drawn accusations that the Commerce Department has become too cozy with Nvidia and its co founder, Jensen Huang, and failed to adequately police chip sales to China, especially Megaspeed.
Recent revelations from The New York Times that Nvidia’s CEO, Jensen Huang, was in a relationship with a woman believed to be a Chinese spy have thrust Lutnick into an uncomfortable spotlight. The woman, Alice Huang, was a top executive at Singapore based Megaspeed, suspected of smuggling Nvidia chips to China. On Thursday, Huang announced his resignation, sending Megaspeed’s shares plummeting.
The issue has brought attention to whether Lutnick’s influence, as an ally of President Trump and a high profile American business leader, kept the U.S. from moving faster to clamp down on Nvidia chip sales. The stakes in the AI race between the U.S. and China are high, with China hawks warning that allowing such sales speeds China’s AI development and gives it an economic and military edge.
Within the Commerce Department, Nvidia is treated differently than other firms, with its issues given high priority. Lutnick frequently calls and meets with Huang, and Nvidia’s general counsel, Tim Teter, has direct access to shape new rules, including leaving comments on draft regulations. An inquiry into Megaspeed’s chip smuggling was shut down after Teter reached out to Commerce Department investigators.
Trump’s close relationship with Huang also made department officials wary of taking aggressive steps to rein in Nvidia’s chip sales, out of concern about angering Lutnick or the White House. In the wake of these revelations, Treasury Secretary Scott Bessent confronted Lutnick during a White House meeting over his handling of Megaspeed, demanding to know why the U.S. hadn’t banned chip sales to the company.
Lutnick responded that new measures could be put in place soon. The Commerce Department denied the interaction happened and said they had worked with other agencies to issue export controls. They also denied that Trump’s relationship with Huang had put a chill on their actions, calling the idea “false and reckless.”
Nvidia’s general counsel, Tim Teter, has been known for his aggressive outreach, shutting down an inquiry into Megaspeed’s chip smuggling after reaching out to Commerce Department investigators. The Biden administration issued regulations in January 2025 to clamp down on remote access to A.I. computing power, but the Trump administration rolled them back shortly after coming into office.
In October, top officials in the Trump administration hoped to move forward with sweeping rules to restrict Chinese companies from accessing A.I. computing power in Southeast Asia. However, Lutnick delayed or deferred these efforts, citing concerns that new actions could instigate a trade war with China.
The frustrations about Lutnick’s approach to export controls are part of a larger battle between him and many others in the Trump White House and cabinet. Lutnick pushed aggressively to become Treasury secretary but was often seen as heavy handed.
In September 2025, the Commerce Department issued a sweeping rule adding tens of thousands of Chinese companies to the “entity list,” which restricted American companies from exporting products to any company on the list unless they obtained a license from the government. China responded by cutting off the supply of rare earth minerals to the U.S., threatening American factories.
The administration quickly suspended the rule as part of a trade pact with China, and Lutnick’s employees were asked to write a summary of what the entity list is. This incident, along with other aggressive actions, prompted harsh reactions from China and criticism from other top officials.
Since then, the department has essentially halted new technology controls against China, concerned that any measures would upset a fragile truce. The department has not issued any entity listings in over a year, the longest stretch of time without an update in 18 years.
Defenders of Lutnick argue that when it came to Nvidia, he was doing what the president wanted. However, the growing friendship between Trump and Huang encouraged Commerce officials to take a more cautious approach. Huang has become a frequent guest at the White House and often speaks on the phone with the president.
Nvidia’s inroads into the White House and the Commerce Department began last year, as the administration pushed forward with a ban on shipments to China of a chip called the H20. Lutnick told Nvidia that the matter was out of his hands, leaving the company to appeal to the president.
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