WASHINGTON: A deepening crisis surrounding Nvidia Corporation has triggered fierce congressional and media scrutiny of the Bureau of Industry and Security (BIS), the crucial Commerce Department agency tasked with overseeing and enforcing the United States’ semiconductor export controls against China.
The controversy centers on a staggering gap in export accounting, allegations of unchecked chip smuggling through Southeast Asia, and controversial administrative decisions involving the agency’s leadership and Nvidia’s recently ousted Chief Executive Officer, Jensen Huang.
The Megaspeed Probe and the 50,000 “Missing” Chips
At the heart of the scrutiny is the handling of Megaspeed International Pte, a Singapore-based data center operator with deep ties to Nvidia. Founded in 2023, Megaspeed rapidly became Nvidia’s largest buyer in Singapore, reportedly acquiring at least $4.6 billion worth of Nvidia equipment.
According to investigative reports, Nvidia’s general counsel contacted the Commerce Department regarding a probe into Megaspeed. During this period, BIS staff were allegedly instructed to route all Nvidia-related requests directly through Under Secretary of Commerce for Industry and Security Jeffrey Kessler, and were told to avoid mentioning Megaspeed or its Malaysian subsidiary, Speedmatrix, in external communications.
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Most alarmingly, inventory filings reportedly undercounted approximately 50,000 partner-routed chips in reports sent to U.S. officials—a discrepancy worth billions of dollars. Despite evidence of smuggling, the Department of Justice reportedly asked BIS to pause its investigation into Megaspeed in late 2025, and sources indicate no significant progress has been made since. Despite this intense scrutiny, Megaspeed remains listed as an official Nvidia Cloud Partner.
Controversial Ties Between BIS Leadership and Jensen Huang
The scrutiny of BIS has intensified following revelations that Under Secretary Jeffrey Kessler actively sought to feature former Nvidia CEO Jensen Huang at the agency’s upcoming annual conference on January 10 in Washington.
According to sources familiar with the internal deliberations, Kessler threw Huang’s name into the mix as a “marquee” option and bragged about his ability to secure the CEO’s attendance. This occurred shortly before Huang was ousted from Nvidia following revelations of extramarital affairs, including one with a woman suspected of spying for China, who is also linked to the Megaspeed controversy. A BIS spokesperson subsequently clarified that no speakers have been officially invited yet.
Congressional Heat and Policy Failures
The apparent regulatory blind spots have drawn the ire of lawmakers. Commerce Secretary Howard Lutnick and Under Secretary Kessler are now facing intense congressional heat, with plans for inquiries and potential probes into the agency’s operations and leadership. U.S. House Speaker Mike Johnson recently noted a growing consensus in Congress to further limit chip exports to China following the spy scandal that forced Huang’s resignation.
The crisis highlights the broader failure of current export controls. Recent research confirms that China’s most powerful AI models were successfully trained using banned Nvidia chips. While direct shipments to China dropped 44% in the first half of 2026, analysts suggest that “remote access” to rented compute power has become the new battleground for evasion.
As the fallout continues, policymakers are expected to push for a tightening of the export control framework, potentially expanding licensing requirements to more countries and significantly increasing funding for BIS enforcement personnel, as the agency is currently viewed as critically understaffed.