Treasury Secretary Bessent Questions Nvidia's China GPU Sales Controls

U.S. Treasury Secretary Scott Bessent on Sunday publicly questioned whether Nvidia (NVDA) knowingly sold restricted AI GPUs to pass-through shell companies, saying anyone at the company found responsible should face consequences. His comments, in an interview with CNBC, shift the focus of an ongoing China chip controversy from former chief executive Jensen Huang's personal conduct to Nvidia's customer screening.

Bessent conceded that U.S. export controls cannot stop every restricted chip from reaching China or other adversaries. China has allegedly obtained millions of restricted AI GPUs from Nvidia despite the rules, he said. Bessent said there is a lot of leakage in the system and that authorities are constantly working to close it down.

He then reframed the controversy. The story has so far been about Jensen Huang's personal foibles, Bessent said, but the real question is whether Nvidia knew its client and made a robust effort to prevent leakage and sales to what were obviously pass-through shell companies.

Bessent singled out Nvidia's general counsel, Timothy Teter, who reportedly contacted the U.S. Department of Commerce to ask whether American authorities were behind the detention of Megaspeed's Alice Wong in Singapore. Bessent said that if this was happening, then there were not robust controls at the company. He said Nvidia does not know for a fact that Jensen Huang knew about it, and that 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.

Bessent declined to speculate on potential consequences for Nvidia if it turned out that some of its executives knew their customers acted as intermediaries for Chinese entities. He expressed confidence that Nvidia's board of directors would conduct a thorough investigation.

On policy, Bessent said the United States does not need stricter export restrictions or new powers for government agencies to stop GPU smuggling. Authorities should properly enforce the regulations already on the books, he said. That position lowers the immediate risk of a fresh wave of licensing rules that could hit Nvidia's revenue, while keeping enforcement pressure on existing cases.

Bessent also described a bureaucratic standoff behind the case. 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 Commerce Department's Bureau of Industry and Security, which stalled the blacklisting effort because Commerce Secretary Howard Lutnick feared the move could worsen trade tensions with China, according to the report.

The practical result, Bessent said, is that a company multiple agencies wanted restricted sat outside the Entity List while restricted hardware kept moving. How the Bureau of Industry and Security acts on Megaspeed, and what Nvidia's board investigation finds, will shape the next phase of accountability for one of the industry's most consequential supply chains.

Nvidia shares closed at $162.85 on Friday, down 2.01%, according to delayed trading data.