Bessent Pressed Lutnick Over 13-Month Blacklist Freeze on Nvidia Client Megaspeed

Bessent Pressed Lutnick Over Megaspeed

Treasury Secretary Scott Bessent confronted Commerce Secretary Howard Lutnick in the White House Situation Room on November 5 with one question: why has Megaspeed, an NVIDIA customer accused of smuggling American chips into China, never been placed on the Entity List? Lutnick answered that he did not know, according to Axios. His department has now gone 13 months without adding a single company to the list, the government's main export-control instrument. Firms on the Entity List cannot buy US technology without a license, and in practice those licenses are usually refused, which makes placement a de facto cutoff from American suppliers. For a chip distributor, that means losing access to the highest-end accelerators outright, which is why smuggling networks route orders through unlisted intermediaries of the kind Megaspeed is alleged to run. The last addition went onto the list on October 9, 2025. More than 100 further names, among them the Chinese AI lab DeepSeek, have cleared an interagency review panel, yet Commerce has never published them, a Reuters report found, leaving approved designations in limbo while enforcement stalls. Lutnick knew the name Megaspeed before the Situation Room exchange. Senator Tom Cotton warned him about the Singapore-registered firm, a spin-off tied to the Chinese government, in an October 2025 letter that urged an investigation into whether the company was skirting US export laws. That letter put Megaspeed's chip orders at nearly 2% of one US company's global data center sales, a figure that places the distributor's purchasing at data-center scale. Megaspeed denies moving chips illegally. NVIDIA's board, which has opened an independent probe into Jensen Huang after the CEO's affair admission and an alleged Chinese spy claim, says the episode did not compromise national security.

The Truce That Froze the Blacklist

The standoff traces back to the trade truce Bessent himself announced with Beijing in October 2025, a deal that paused the tougher export rules Commerce had readied. It froze the so-called affiliates rule, which would have extended Entity List curbs to any company at least 50% owned by a listed entity, capturing subsidiaries and front companies automatically. In September, Bessent said the truce would run to January 10, 2027. On November 5, the same day as the Situation Room confrontation, Commerce pushed the suspension of that frozen rule out to the identical date, an alignment the law firm Baker McKenzie flagged. The freeze means even firms matching the ownership threshold cannot be listed while the suspension runs, and it helps explain the backed-up approval pipeline: publishing new names would press directly on the deal Bessent negotiated. Commerce defends its record, saying it uses the blacklist every day against bad actors, and it closed an AI chip export loophole in May. Kevin Kurland, a former Commerce official, said trade policy is “overshadowing the use of a critical national security tool.” The market has kept its own count. NVIDIA has shed roughly $700 billion in market value in November, extending a two-day selloff that had already erased $400 billion. NVDA shares climbed 2.7% to $173.29 in early Wednesday trading. Earnings arrive on November 17, the first quarterly report since the blacklist question moved into the Situation Room. If Megaspeed is designated, it would be the first new name on the Entity List in 13 months, and the truce boxing the list in does not expire until January 10.

The collision comes down to one number in the primary record: the Senate letter put Megaspeed's orders near 2% of a US company's global data center sales, a scale that sits awkwardly beside a list that has not grown since October 2025. NVIDIA now trades inside two clocks. The $700 billion November drawdown and the November 17 earnings report both fall inside a window that closes on January 10, 2027, when the truce lapses and the affiliates rule could return. A Megaspeed designation before then would be the first enforcement action of the truce era; none has appeared in 13 months.