Scoop: Inside Bessent's Situation Room confrontation with Lutnick over China chip security

Treasury Secretary Scott Bessent confronted Commerce Secretary Howard Lutnick over a failure to place Nvidia customer Megaspeed on a list of companies that pose national security concerns, sources familiar told Axios. Why it matters: The Commerce Department oversees the export of sensitive U.S. technologies and Lutnick's actions — or lack thereof — are increasingly under scrutiny following revelations that Nvidia CEO Jensen Huan g had an affair with Megaspeed employee and suspected Chinese spy Alice Huang. Driving the news: At a White House Situation Room meeting on Thursday after the midterm elections, Bessent pressed Lutnick on why Megaspeed was had not been added to the Commerce Department's entity list, to which Lutnick responded he would "look into it." Commerce Undersecretary Jeff Kessler also was repeatedly warned about Megaspeed in deputy meetings. But sources told Axios that Lutnick has spent the last year "undoing" efforts by other administration officials to hold Megaspeed — a company accused of illegally diverting U.S. chips to China — accountable because of concerns it would escalate the trade war with China. Catch up quick: The Commerce Department is increasingly at the center of scrutiny over the broader Trump administration's handling of an intelligence memo overseen by State Department head Marco Rubio. Lutnick was among the officials who received the report in May, ahead of a trip to China, Axios first reported. On Tuesday, the New York Times reported Commerce Undersecretary Kessler abruptly stopped an investigation into Megaspeed after Nvidia intervened. The Financial Times reported the department was delaying efforts to blacklist Megaspeed despite several U.S. government agencies pushing it to do so. Inside the room: White House and intelligence officials have pressed Lutnick and his top advisers to take action against Megaspeed since the fall of 2025, sources tell Axios. But they refused, so Bessent spoke up Thursday. "How come Megaspeed isn't o