Nvidia scandal: Howard Lutnick under pressure over alleged lack of action

One of Donald Trump's top lieutenants reportedly could soon be fired, as criticism mounts over Commerce Secretary Howard Lutnick's apparent lack of action over the Nvidia spying scandal. Jensen Huang resigned from Nvidia on Thursday, and was replaced on an interim basis by chief financial officer Colette Kress after reports emerged of multiple affairs, most importantly with Alice Huang, who is no relation but is suspected to be a Chinese spy.

Pressure is mounting on Lutnick after it emerged that a US intelligence report warning about Huang's relationship with the alleged Chinese spy was circulated among senior figures in the Trump administration. Lutnick is scheduled to testify alongside the ousted Nvidia chief before Congress in the coming weeks.

Political Fallout

Lutnick is also facing criticism for a delay by the commerce department in adding Singapore-based Megaspeed, which is associated with Alice Huang and has bought billions of dollars of Nvidia chips in recent years, to Washington's blacklist of companies that the US considers a risk to national security despite reported concerns within the administration.

White House officials are now discussing whether Lutnick should be fired, the Associated Press reported. Utah Republican senator John Curtis said that Lutnick's reported delay on export controls regarding Megaspeed 'raises the question of whether the commerce department is acting in the best interests of the American people'.

Congressional Investigation

Senate Democratic leader Chuck Schumer said Huang and Nvidia must answer as to whether America's security had been jeopardised, adding that the Trump administration also must account for what it did once it learned about Jensen Huang's reported relationship with Alice Huang.

Donald Trump's close ties with Jensen Huang have come under renewed scrutiny as a timeline of the saga started to emerge. The president called Jensen Huang two days before he stepped down and urged him to fight for his job, the New York Times has reported.

National Security Implications

Nvidia's advanced AI chips are widely used to develop cutting-edge AI models, making the company important to the US race against China to build superior AI systems. The US has sought for years to limit China's access to Nvidia's chips because it does not want the Chinese military to benefit from them.

House speaker Mike Johnson said there was now growing consensus in Congress on limiting chip exports to China. 'The export controls on chips to China has been a big issue around here,' Johnson told reporters at the US Capitol, adding that he favoured limiting China's access to the advanced technology.

Chinese AI companies are now trying to secure Nvidia chip capacity outside China, amid growing concern that the gap in US export controls may now be closed after the scandal. Beijing has also stepped up efforts to develop domestic alternatives, including through Huawei, although analysts say Chinese chips remain less efficient for training advanced AI models.