Commerce Chief Lutnick Stalled Trump Crackdown on Nvidia Chip Diversion
United States Commerce Secretary Howard Lutnick stalled executive enforcement actions aimed at curbing the unauthorized diversion of advanced Nvidia artificial intelligence processors to China, according to reporting by Axios. United States President Donald Trump subsequently authorized enforcement measures against suspected intermediary companies for the third time this year following private consultations with technology billionaire Elon Musk. During an executive meeting convened inside the White House Situation Room on Thursday, Treasury Secretary Scott Bessent directly challenged Lutnick regarding regulatory resistance from commerce officials. Lutnick appeared to agree but said he needed to check with Trump, according to Axios.
Cabinet Confrontation and Administration Frictions
The Situation Room gathering included Defense Secretary Pete Hegseth, United States Trade Representative Jamieson Greer, and Secretary of State Marco Rubio alongside Bessent and Lutnick. A confidential memo drafted under Secretary of State Marco Rubio circulated before President Trump's visit to China, India Today reported.
Intermediary Networks and Preferred Partner Timing
Investigative findings published by The Information revealed that intermediary corporate networks facilitated the transfer of more than $7.5 billion in restricted computing hardware to Chinese buyers. At the centre of regulatory inquiries is Shanghai Century Litong, which secured Nvidia Preferred Cloud Partner status in October 2023, just four months after its incorporation and two weeks after expanded export restrictions took effect. The corporate structure of Century Litong was traced to the family of Alice Huang, a former executive at Singapore-based cloud provider Megaspeed. Her sister Huang Yu holds a 31% equity interest in Hexi Capital, an investment enterprise founded by Chinese financier Kang Wei, who faced regulatory fines totaling 2.9 million yuan.
Chip Volumes and International Smuggling Probes
The Information estimated that approximately 240,000 restricted Nvidia processors, primarily high-end H100 and H200 systems alongside A100 units, were funneled into China through affiliated entities. Singapore-based Megaspeed imported approximately $4.6 billion in artificial intelligence processors between 2023 and 2025, while its Malaysian unit Speedmatrix received over 200 shipments valued near $2 billion. Singaporean authorities initiated a formal probe into Megaspeed in October 2025 regarding illicit semiconductor diversions, while Beijing dismissed espionage allegations as groundless smears. Bessent pressed Lutnick on why Megaspeed was not on the Commerce Department's Entity List, and the Commerce Department denied that the confrontation occurred, according to ExplainX.
Background
President Donald Trump previously approved enforcement actions against semiconductor diversion networks in May and August, according to The Defiant.
Northwestern Polytechnical University, a Chinese defence university under US sanctions, bought two H200 chips in October for 874,700 yuan, according to a procurement record cited by The Edge Malaysia.