US Senator Bennet demands answers on China AI chip diversion probe

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US Senator Bennet demands answers on China AI chip diversion probe

Synopsis

A sitting US senator is pushing the Trump administration to explain why a cloud firm suspected of funnelling American AI chips to China has not yet been blacklisted — even as Nvidia quietly cut off sales in June 2025 and Treasury reportedly clashed with Commerce over the case in a Situation Room showdown.

Key Takeaways

Senator Michael Bennet set a 24 November deadline for written answers from Commerce , Justice , State , and Intelligence chiefs on suspected AI chip diversion to China .
The letter asks whether cloud firm Megaspeed will be placed on the Entity List , which would bar it from US-origin technology.
Nvidia confirmed it stopped sales and shipments to Megaspeed in June 2025 , with the ban reportedly still in effect.
Megaspeed denies any illegal activity, saying internal reviews found no evidence of illicit transfers.
Reports indicate Treasury Secretary Scott Bessent clashed with Commerce Secretary Lutnick over designating Megaspeed a national-security threat.
Bennet also sought coordination with Singapore , Malaysia , and Indonesia on plugging transit-route loopholes.

US Senator Michael Bennet has formally demanded that the Trump administration provide written answers by 24 November regarding the suspected diversion of advanced American artificial intelligence chips to China, escalating congressional pressure over a case involving cloud services firm Megaspeed. The Colorado Democrat, who serves on the Senate Intelligence Committee, directed his requests to four senior officials in a letter released on Wednesday.

Who Received the Demands

Bennet addressed his letter to Commerce Secretary Howard Lutnick, Attorney General Todd Blanche, Secretary of State Marco Rubio, and Director of National Intelligence Jay Clayton. Among his key questions: whether Commerce would restrict shipments to Megaspeed or place the company on its Entity List — a designation that would effectively block it from receiving US-origin technology.

'Our export control regime must be able to identify and curtail entities actively seeking to evade those controls,' Bennet wrote in the letter.

What Bennet Is Asking

Beyond the Megaspeed question, the senator sought clarity on coordination with Singapore, Malaysia, and Indonesia — jurisdictions that have reportedly served as transit points in suspected chip-diversion networks. He also requested measures to address Chinese access to restricted technology through overseas subsidiaries and remotely accessible computing services, a channel that has drawn growing scrutiny from regulators.

Citing reporting by The New York Times, Bennet additionally asked for an update on a Justice Department investigation that was reportedly initiated by Commerce's Bureau of Industry and Security (BIS). BIS has defended its handling of the matter: 'BIS conducts all enforcement strictly by the book,' a spokesman told The Wall Street Journal.

Megaspeed's Position and Nvidia's Move

Megaspeed has denied any involvement in illegal chip transfers, asserting in a prior statement that internal reviews found no evidence of illicit activity. 'We operate fully within the bounds of all applicable export control regulations and maintain the highest standards of legal and ethical conduct,' the company said. Notably, that statement predates Bennet's letter and is not a direct response to his latest demands.

Separately, Nvidia confirmed it halted sales and shipments to Megaspeed in June 2025, with the prohibition reportedly still in effect according to The Wall Street Journal. An Nvidia spokesman told the newspaper that the company obtained Commerce's permission for parts and replacement components supplied after the cutoff.

Megaspeed describes itself as a specialised cloud provider offering access to Nvidia graphics processors, virtual servers, storage, and networking — including computing resources for machine learning and AI inference.

Internal Administration Rift

The congressional demand arrives against a backdrop of reported disagreement within the administration over how to handle the Megaspeed case. CNN reported on Wednesday, citing two people familiar with the matter, that Treasury Secretary Scott Bessent challenged Lutnick during a Situation Room discussion the previous week over Commerce's apparent reluctance to designate Megaspeed a potential national-security threat. The reported friction underlines deeper tensions between trade and security priorities within the administration.

What Happens Next

The 24 November deadline Bennet has set will be an early test of how the administration responds to bipartisan pressure on export controls — an area where both parties have broadly agreed China poses a strategic threat. Depending on the administration's response, Congress could move toward legislative action to tighten BIS's enforcement powers or expand the Entity List criteria.

Point of View

Not a legal compulsion, but the optics of non-response are costly. What is underreported here is the remotely accessible computing angle: firms do not need to physically ship chips to give restricted parties access to restricted compute, and that regulatory gap remains largely unaddressed.
NationPress
12 Nov 2026

Frequently Asked Questions

Why is Senator Bennet demanding answers about Megaspeed and AI chips?
Senator Michael Bennet has demanded written answers from four Trump administration officials by 24 November over suspected diversion of advanced American AI chips to China via cloud firm Megaspeed. Bennet, a member of the Senate Intelligence Committee, wants to know why Megaspeed has not been placed on the Commerce Department's Entity List.
What is Megaspeed and what does it do?
Megaspeed is a specialised cloud services provider that offers access to Nvidia graphics processors, virtual servers, storage, and networking resources, including computing services for machine learning and AI inference. The company has denied any involvement in illegal chip transfers and says its operations comply with all applicable export control regulations.
Why did Nvidia stop selling to Megaspeed?
Nvidia halted sales and shipments to Megaspeed in June 2025, with the prohibition reportedly still in effect. An Nvidia spokesman said the company obtained Commerce Department approval for any parts or replacement components supplied after that cutoff date.
What is the internal disagreement within the Trump administration over this case?
CNN reported that Treasury Secretary Scott Bessent challenged Commerce Secretary Howard Lutnick during a Situation Room meeting over Commerce's reluctance to designate Megaspeed a potential national-security threat. The reported clash reflects broader tensions between trade priorities and security enforcement within the administration.
How could the US close loopholes that allow China to access restricted AI technology?
Senator Bennet has asked for measures targeting two key vectors: Chinese access through overseas subsidiaries and through remotely accessible computing services, which allow restricted parties to use advanced chips without physically importing them. He has also requested coordination with Singapore, Malaysia, and Indonesia, which have been cited as potential transit points.
Nation Press
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