Lutnick Must Go: Former NSC Official Says Commerce Chief Enabled Nvidia Chip Smuggling to China

On Thursday, Jensen Huang stepped down as head of Nvidia, one of the most valuable companies in the world. His resignation followed his admission of an extramarital affair with a woman alleged to be a Chinese spy. Chris McGuire, a senior fellow at the Council on Foreign Relations, argues in a New York Times opinion essay that a second scandal is taking shape at the Department of Commerce, and that its secretary, Howard Lutnick, bears nearly as much responsibility for the crisis as Mr. Huang does. This is an argument piece, and the claims below are McGuire's.

McGuire served on the National Security Council, where he oversaw export controls and artificial intelligence policy. He writes that Nvidia's most advanced chips, the ones that drive AI, are considered so critical to national security that they cannot be sold to Chinese companies. He calls Mr. Huang's judgment terrible, given that the woman, Alice Huang, no relation, is a Megaspeed executive suspected of ties to Chinese intelligence, and Megaspeed is believed to be diverting banned Nvidia chips to China. China has rejected the espionage claims. McGuire's point is that Mr. Lutnick's decision not to enforce anti-smuggling export controls helped make Mr. Huang a potential target.

The timeline starts in January 2025, when the Biden administration imposed new controls aimed at chip smuggling. Unvetted companies in most countries would have needed a Commerce Department export license before making any large AI chip purchase. Mr. Lutnick took office the next month, and McGuire says he never let the rules take effect. Mr. Huang was by then building a close relationship with the new president and with Mr. Lutnick, and Nvidia long maintained there was no evidence restricted chips were being diverted to China. In May 2025, Commerce announced it would not enforce the controls and said it would eventually replace them with other measures.

According to McGuire, no replacement rule was ever published, and the Biden-era controls were never formally rescinded. In practice, he writes, Mr. Lutnick left the vetting of diversion risk to the private sector, including Nvidia and AI server suppliers such as Supermicro.

He points to Taiwanese customs data showing that from 2025 to 2026, more than $60 billion worth of AI chips were most likely shipped to Singapore, Malaysia and Thailand, which makes those three relatively small countries among the largest AI chip importers in the world. Some went to U.S.-owned data centers, he says, but many probably reached companies that passed them on to China. Commerce investigators reportedly suspected China was the final destination of Megaspeed's chips, and the company was found in late 2025 to have kept strong ties to China. McGuire puts the reported Megaspeed smuggling at $7 billion, which he calls likely the tip of the iceberg. He notes that China is months, not years, behind the United States in AI.

He also describes a business built on the gaps. DayOne, a Singapore-based data center company spun out of a China-based company in 2025, has filed to go public on Nasdaq. McGuire's calculations from its SEC filings suggest it is building capacity for more than 1.5 million of the most advanced Nvidia chips in Southeast Asia. It exploits a loophole that lets Chinese firms use AI chips housed in data centers outside China. ByteDance and its affiliates supply 70 percent of its revenue, its customers include at least two companies the U.S. government designates as Chinese Military Companies, and its chief executive previously worked for the company it was spun out of.

McGuire adds that Mr. Lutnick has not put a single company on the entity list, Commerce's trade blacklist, in over a year, the longest gap in 18 years. Mr. Lutnick was reportedly briefed in May 2026 on Mr. Huang's relationship with Alice Huang and her suspected intelligence ties. He is reportedly still resisting putting Megaspeed on the list despite urging from other administration members, including President Trump, and Nvidia's website still calls Megaspeed an official cloud partner. McGuire also reports that in May 2025 Jeff Kessler, a top Lutnick deputy overseeing export controls, discussed the ongoing Megaspeed investigation with Nvidia's general counsel, which he calls highly unusual. The department halted the investigation soon after.

His prescriptions: Mr. Lutnick should resign, Commerce should enforce the remaining anti-smuggling rules or replace them with stricter ones, and it should close the loophole letting Chinese firms rent chips they cannot legally buy. Congress, he says, should pass three pending bipartisan bills, the AI Overwatch Act, the MATCH Act and the Chip Security Act, and investigate why Mr. Lutnick and Mr. Kessler did not act. The next signals to watch are whether those bills move and whether Megaspeed is added to the entity list.