Opinion: Howard Lutnick’s Export Control Failure Put Chip Security at Risk
Alleged Smuggling Raises Alarm
Jensen Huang, Nvidia’s head until Thursday, resigned after admitting to an extramarital affair with a person described as an alleged Chinese spy. The article says the person worked for Megaspeed, which reportedly smuggled $7 billion in Nvidia chips into China.
It argues that Lutnick, the Commerce secretary, bears substantial responsibility for conditions that enabled the alleged shipments. The article also says those conditions allowed China to remain competitive in the contest for A.I. supremacy.
Controls Were Never Enforced
In January 2025, the Biden administration introduced export controls intended to counter Chinese chip smuggling. They required companies in most countries that had not been vetted to obtain Commerce Department licenses before large A.I. chip purchases.
Lutnick took office the following month, but the controls did not take effect. In May, the department said it would not enforce them and would eventually introduce other anti-smuggling measures. Nvidia had maintained there was “no evidence” of restricted chips being diverted to China, according to the article.
No Replacement Rule Appeared
The department did not publish a replacement rule, nor did it formally withdraw the Biden administration’s controls. The article says Lutnick instead left private companies, including Nvidia and server supplier Supermicro, to judge whether buyers posed diversion risks.
The article describes the outcome as a breakdown in oversight, saying chip smuggling is widespread. It cites Taiwanese customs data showing that more than $60 billion in A.I. chips were likely shipped to Singapore, Malaysia and Thailand from 2025 to 2026.
Key points
- The article says Lutnick did not put Biden-era chip export controls into effect.
- Commerce promised replacement anti-smuggling measures but never published a new rule.
- Private companies were left to assess risks that chips could be diverted to China.
- Taiwanese customs data indicates more than $60 billion in A.I. chips likely went to three Southeast Asian countries.