Treasury Secretary Scott Bessent confronted Commerce Secretary Howard Lutnick last week over his handling of a Singaporean company at the heart of revelations about Chinese spying on Nvidia, demanding to know why the United States had not already banned sales of advanced A.I. chips to the firm.
The exchange, which took place at the White House on Thursday and was described by people briefed on it, highlighted growing tensions inside the Trump administration over A.I. policy in general and the Commerce Department’s posture toward Nvidia in particular.
The internal debate has only intensified after Jensen Huang, Nvidia’s chief executive, acknowledged he had an affair with a woman who had helped lead the Singaporean data center company, Megaspeed. The woman, Alice Huang, a Chinese citizen, has been identified by U.S. intelligence as a spy for China’s Ministry of State Security, The New York Times has reported.
Mr. Lutnick responded to Mr. Bessent that the Commerce Department could now move quickly to put restrictions on Megaspeed in place, said the people briefed on the exchange, who spoke on condition of anonymity because the discussions were private.
A spokeswoman for the Commerce Department denied that the conversation between Mr. Bessent and Mr. Lutnick had taken place. She said that the decision about whether to add companies to the entity list was an administration-wide one.
The Treasury Department did not provide a comment.
The United States has imposed restrictions since late 2022 on selling advanced chips directly to China. But Megaspeed and other companies have sidestepped those rules by setting up data centers in Southeast Asia to cater to Chinese clients. U.S. officials have also been investigating Megaspeed for potentially diverting those chips illegally into China, a charge that Megaspeed has denied.
