Howard Lutnick's Commerce Department is stalling an effort to place Megaspeed, a Singapore-based cloud company under investigation for allegedly shipping advanced Nvidia (NVDA) chips to China, on a US trade blacklist, according to The Financial Times.

The dispute over US export rules is already contentious. It has become more so because of Megaspeed's ties to Alice Huang, a former director accused of spying for Beijing who allegedly had a romantic relationship with Nvidia CEO Jensen Huang.

Federal agencies want Megaspeed blacklisted

The Entity List, administered by Commerce's Bureau of Industry and Security, functions as a barrier against foreign entities attempting to acquire American technology. US exporters need special licenses to sell products to listed firms, a mechanism that lets Washington deny such equipment to China for military advancement. With US export controls on advanced AI chips tightening in recent years, the list has become one of Washington's primary tools for keeping cutting-edge hardware out of Chinese hands.

According to the FT report, the State, Energy and Treasury departments, together with the Pentagon, pushed to add Megaspeed. Commerce chairs the interagency panel that decides listings, with Defense, State and Energy serving as voting members. Treasury may join discussions without a formal seat. In practice, that structure means no company can be added to the list unless the chairing department moves the designation forward.

Over the past two months, Commerce officials have asked other agencies to supply more information about some proposed additions. It remains unclear whether Megaspeed itself was among the companies flagged for further evidence. Whatever the reason, the delay has left the firm outside the restrictions.

Investigators have spent more than a year examining whether Megaspeed has been shipping controlled Nvidia processors into China. The blacklist process is now drawing fresh scrutiny following the Alice and Jensen affair, which brought to light a classified government memo about their purported relationship. The FT reported that Trump was briefed in May.

Chris McGuire, a former senior US export-controls official, said: "It is mind-boggling that commerce knew months ago that Megaspeed is being run by a Chinese spy but did nothing to stop them from buying $4.8bn worth of Nvidia chips. I can't come up with a single good reason for that inaction."

McGuire also argued that potentially untrustworthy purchasers should be subject to licensing requirements under existing rules before receiving high-performance AI chips.

The Commerce Department defended its record, saying it had "enforced aggressively across the board, including on smuggling advanced chips," citing six investigations that produced "criminal charges against 17 defendants involving billions of dollars of smuggled chips."

Nvidia cut off sales while Megaspeed faced scrutiny

Megaspeed traces its origins to 7Road, a Chinese gaming company that spun it off in 2023. It later operated as an authorized Nvidia Cloud Partner, entitled to buy the chipmaker's graphics processing units (GPUs) for computing services. The company did not manufacture all its products; instead, it relied on leased data centers in Southeast Asia, including in Singapore and Indonesia — facilities capable of housing the processors that train AI models and run complex software.

In Singapore, Alice was among the Chinese nationals who served as a director until November 2023. Megaspeed's current owner is Swiftdata, a Singapore-based company founded shortly before her departure. Tan Yong Pong, a Singaporean, is the only listed director of both companies.

Megaspeed has been under investigation by Singapore police since October 2025 and continues operating under heavy regulatory pressure. After reports of alleged chip trafficking, foreign operators of the data centers canceled their lease agreements, citing the risk of secondary sanctions.

Nvidia, however, maintains that it did not wait for Washington to act, stating it severed all dealings with Megaspeed more than a year ago.

"Despite Megaspeed not being on the entity list or subject of an 'is informed' letter, we placed Megaspeed on our block list in June 2025, prohibiting any further sales or shipments," an Nvidia spokesperson allegedly said. "That voluntary block remains in place."

An "is informed" letter is a Commerce Department notice instructing an exporter that it must obtain a license for certain transactions. Nvidia says it imposed its own ban without either that notice or an Entity List designation.

For now, the questions to watch are whether Commerce ultimately adds Megaspeed to the Entity List and how Singapore's police investigation, opened in October 2025, is resolved.