The delay in action has placed Commerce Secretary Howard Lutnick at the center of a growing controversy regarding the administration’s response to suspected Chinese espionage. Axios previously reported that Lutnick slow-walked broader administration efforts to address suspicions that Megaspeed was illegally diverting chips to China. President Donald Trump reportedly supported taking action on three separate occasions, but officials indicated those efforts were delayed by the Commerce Department. This hesitation has drawn sharp criticism from Republican members of Congress and fellow Cabinet members, who are seeking accountability for what they describe as a failure to protect national security interests.
The controversy is deeply intertwined with a separate scandal involving former Nvidia CEO Jensen Huang. Sources told Axios that the brewing dispute hangs on a Central Intelligence Agency warning that Huang was having an affair with Alice Huang, who ran Megaspeed and was alleged to be a Chinese spy. Last fall, CIA intelligence indicated that Jensen Huang was the target of this espionage, details reported in a document assembled by the Office of the Director of National Intelligence for a small circle of top-secret clearance holders. In March, Secretary of State Marco Rubio, who also serves as White House national security adviser, compiled a memo to ensure Cabinet officials with “equities” in Nvidia and AI were informed of the risks. One source stated, “The memo was made so that Lutnick and Bessent and others knew what was up,” while a second source claimed, “Howard was given the memo. He ignored the memo.”
In May, during a presidential trip to China aboard Air Force One, Rubio verbally briefed the president on the matter as a “reminder,” according to sources familiar with the events. Despite the escalating pressure, there are no indications that President Trump has changed his stance regarding Lutnick. The president has repeatedly defended Lutnick on various issues, including tariffs and immigration, and continued to stand by him following public comments on Thursday. MAGA commentators and Republican senators have increasingly targeted Lutnick, with some calling for his removal, but the White House has not expressed concern regarding efforts to have him testify before Congress.
The Commerce Department responded to Axios’ inquiries by defending its secretary. “Secretary Lutnick plays a fundamental role in advising the President across many different industries. The reports you have issued are inaccurate and false and literally misstate the topic, creating a false impression,” the department said. While Trump continues to defend Lutnick, administration officials and congressional Republicans have clearly identified him as the primary target in the dispute over the Megaspeed designation.
