U.S. Treasury Secretary Questions Nvidia Controls Over Alleged Shell Company GPU Sales

U.S. Treasury Secretary Scott Bessent said U.S. export controls cannot prevent all restricted AI hardware from reaching China or other adversaries, and that the country allegedly obtained millions of restricted AI GPUs from Nvidia. He questioned the efficiency of Nvidia's internal controls and called for accountability at the company, while stressing that it was unclear whether Nvidia chief executive Jensen Huang knew about potentially illicit practices.

Bessent Questions Nvidia's Client Checks

In an interview with CNBC, cited via @siliconmemes, Bessent said, 'I think that there is a lot of leakage in the system, and we are constantly working to close that down.' He said the story should focus on whether Nvidia knew its client and whether there was a robust effort at Nvidia to make sure there was no leakage and that it was not selling to what were obviously pass-through shell companies. He added, 'I think it is important that anyone at the company there be held accountable for that.' Bessent also said, 'But let us just say, if this was happening, then there were not robust controls at the company,' and 'We do not know for a fact that Jensen Huang knew this.' He said the general counsel seems to have been very involved and probably should have done more oversight rather than haranguing government officials at the U.S. Department of Commerce.

Export Controls and Enforcement

Bessent admitted that despite strict U.S. export controls that prohibit sales of advanced AI GPUs to China, considerable quantities of restricted hardware may still make their way to the country. However, he said he does not believe the U.S. needs more stringent export restrictions or additional powers for government agencies to prevent GPU smuggling. Instead, he said authorities should properly enforce existing regulations. Bessent declined to speculate about potential consequences for Nvidia if some executives knew their customers acted as intermediaries for Chinese entities, and he expressed confidence that Nvidia's board of directors would conduct a thorough investigation into the matter.

General Counsel and Megaspeed

Bessent criticized Nvidia general counsel Timothy Teter, who reportedly contacted the U.S. Department of Commerce to inquire whether U.S. authorities were behind the detention of Megaspeed's Alice Wong in Singapore. Bessent also said the Departments of the Treasury, War, and State, along with the Office of the U.S. Trade Representative, had supported adding Megaspeed to the Entity List for months. The authority to impose such export restrictions belongs to the Department of Commerce's Bureau of Industry and Security, which reportedly stalled efforts to blacklist Megaspeed for months because Commerce Secretary Howard Lutnick feared the move could worsen trade tensions with China.

Sources: Tom's Hardware