Lutnick delays chip export controls despite presidential approval

Axios reported that Commerce Secretary Howard Lutnick has delayed enforcing export controls on illicit chip diversions to China on at least three occasions, in May, August, and November, despite presidential approval. During a Situation Room meeting, Treasury Secretary Scott Besant confronted Lutnick about his department's resistance, particularly regarding Megaspeed, a Singapore-based NVIDIA customer under investigation for helping Chinese firms bypass export controls. Sources indicated that President Trump consulted with Elon Musk, who sided with the hawks, and subsequently approved the action. However, Lutnick continued to delay execution, prompting cabinet officials including Defense Secretary Pete Hegseth, U.S. Trade Representative Jameson Greer, and Secretary of State Marco Rubio to express frustration with what they viewed as obstructionism. The New York Times reported that Commerce Undersecretary Kessler had previously halted the investigation after NVIDIA intervened, while the Financial Times noted the Commerce Department is delaying the blacklisting of Megaspeed. Chris McGuire, a Senior Fellow at the Council on Foreign Relations, argued that exporting to known Chinese companies is a felony and that the failure to enforce regulations poses a significant national security risk. He noted that $80 billion in AI chips went to Singapore, Thailand, and Malaysia this year, suggesting Megaspeed is merely the tip of the iceberg for smuggling.