Lutnick reportedly stalled Trump's crackdown on Nvidia chip diversion to China
Axios reported that Commerce Secretary Howard Lutnick repeatedly held up a White House push against companies suspected of routing Nvidia AI chips to China, and Reuters carried the report on Nov. 11. According to Axios, President Donald Trump authorized the crackdown on Thursday, Nov. 5, the third such approval this year, after consulting Elon Musk. Enforcement runs through the Commerce Department's Bureau of Industry and Security, which licenses chip exports and polices diversion, so a stall inside Commerce can block action even after the White House signs off.
At a Situation Room meeting that Thursday, Treasury Secretary Scott Bessent confronted Lutnick about his department's resistance to export controls. Lutnick reportedly appeared to agree but said he had to check with Trump first. Commerce called the reported exchange false. The dispute centers on Megaspeed, a Singapore-based company that national security officials want placed on the Entity List, a Commerce trade blacklist that requires licenses before US suppliers can sell to listed firms.
The backdrop includes Nvidia's own scrutiny. Its board opened an investigation after reports that CEO Jensen Huang had a close relationship with a Chinese businesswoman whom U.S. intelligence officials believed was spying for Beijing. The New York Times reported that Megaspeed bought about $4.8 billion of Nvidia chips over two years, though no wrongdoing by the company has been established.
Why it matters
For builders, the key risk is scope. Tighter diversion rules could reach cloud rentals and resellers, not only direct chip sales. Teams that rent GPU capacity or buy hardware through intermediaries should review their suppliers' end-use records now and confirm which jurisdictions their hardware passes through. Buyers relying on resellers in hubs such as Singapore, where diversion usually runs through third-country buyers, face the most exposure to new screening.
For founders raising money and the investors backing them, the issue is timing. Lawmakers from both parties are pressing for tougher chip export rules, and an enforcement delay can keep diversion channels open while regulatory risk builds. Companies with China-exposed revenue or Southeast Asian supply chains should model possible compliance costs and license requirements for their GPU supply rather than assume current rules will hold.
Key points
- 1Trump approved a crackdown on suspected Nvidia chip diversion to China three times this year, in May, August and November.
- 2Commerce Secretary Howard Lutnick reportedly delayed enforcement, which runs through the Bureau of Industry and Security.
- 3Treasury Secretary Scott Bessent confronted Lutnick in a Situation Room meeting about export control implementation resistance.
- 4Commerce denied the reported Situation Room exchange, with a spokesperson calling it false.
- 5
