This proposed regulation makes no sense. It's almost as if Commerce purposefully wrote a regulation that gives the appearance of closing the remote access loophole, but would not actually do so. This article reads like a strategic leak by Commerce to try to take some heat off itself. However, I doubt this proposal would actually pass muster with the rest of the administration, which clearly wants regulations that would actually cut China off from advanced AI chips. Commerce is proposing expanding licensing policies for AI chips to Singapore, Malaysia, Thailand, Indonesia, Brazil, South Africa, and Norway (?!). The first six countries I understand; not clear why Norway is included. Commerce is also proposing banning data centers in those countries from providing remote access to China to Blackwell and above chips. The problem is, this would be a totally inept and ineffective remote access ban. It means data centers in every other country--including data centers in the United States--would still be allowed to provide China with remote access to Blackwell chips. And data centers in every country could still provide China with remote access to H200 chips. So China would just use U.S., Canadian, Australian, Japanese, or Finnish data centers to access Blackwell chips and power its AI systems, while continuing to also remotely access H200s from data centers in Malaysia. If the President's policy is no Blackwell access for China, this approach obviously fails to accomlish that objective. And while I don't think China should have access to any H200 chips, this approach also clearly undermines the President's policy of charging a fee for exports of H200 chips to China, as China can just legally remotely access H200s to avoid the fee. Commerce is obviously facing a LOT of heat right now, given all of DC is realizing their utter failure to enforce or implement export controls has allowed many billions of dollars worth of chips to flow to China. You would think they would at least leak a policy proposal that made sense and would be effective.

Stunning report. At this point it seems like Howard Lutnick and Jeff Kessler are just outright defying the President's orders on export controls. The President apparently ordered Secretary Lutnick to crack down on China's access to controlled AI chips in Southeast Asia--and reportedly has ordered this three separate times--and they're just...not doing it. Why is Lutnick refusing to act? Why is he allowing China to continue to get AI chips via Southeast Asia? At this point, Lutnick isn't just protecting Nvidia, he's straight up protecting Chinese companies--reportedly against the wishes of the President and the entire rest of the Cabinet. Is Lutnick personally benefitting from China getting access to AI chips? This is a total breakdown inside the administration on a major national security issue. There has to be accountability for this. Congress obviously will investigate, but how is it that the President's own appointees are just refusing to execute the President's orders? I've never seen anything like this.

Secretary Lutnick literally couldn't even explain why Megaspeed isn't on the Entity List when confronted about it at an NSC meeting by Secretary Bessent. Not only does the rest of the administration not support Commerce's refusal to implement or enforce export controls, but Commerce can't even explain their lack of action when asked about it. This is beyond absurd, and needs to be investigated. And to be clear, placing Megaspeed on the Entity List today would be way too little too late. Chinese AI chip smuggling via Southeast Asia is rampant. China would just get chips via Speedmatrix, or any of the dozens of other cutouts in Malaysia/Singapore/Thailand that already exist. Commerce needs to enforce the existing regulations (which it has refused to enforce since May 2025) that would require a license for all AI chip shipments to Southeast Asia, and also require a license for all large-scale AI chip orders to non-trusted companies in most countries. If a sketchy company is ordering $5 billion worth of AI chips, the US government must know about it and at least have the ability to block the sale. This is the only way to cut down on Chinese smuggling, otherwise we're just playing a game of whack-a-mole that is difficult in the best of times, and that this Commerce department has shown it is uniquely inept at.

The AI race with China is all about who has the best and most chips. There are four main ways China gets access to chips: 1.) Buying them directly from US companies like Nvidia. 2.) Illegally smuggling them from other countries into China. 3.) Accessing them remotely through the cloud from data centers located in places like Southeast Asia. 4.) Building their own domestic chips in China. The Chinese military has used advanced chips to further its capabilities while undermining our national security, and the Chinese government has used these chips to strengthen its totalitarian surveillance project. Congress has a generational opportunity in this year’s NDAA to pass bipartisan bills that would address all four of the pathways through which China acquires chips. While we need a full assessment of the damage done to our national security by recent revelations, we can begin today by setting a better course. No excuses. No apologies. Let’s get this done.

Absolutely insane that the Department of Commerce still refuses to place Megaspeed on the Entity List, despite knowing it is run by Chinese spies. It's difficult to draw any other conclusion from this than that Commerce leadership is just utterly uninterested in protecting US national security. Totally disqualifying. Also, Megaspeed is undoubtedly only the tip of the iceberg. Commerce needs to urgently fix the gaping hole in US export controls that Southeast Asia represents, and at a minimum impose a license requirement for the entire region, and likely for all large-scale orders to untrusted companies like Megaspeed. The fact that Commerce refuses to even block shipments to companies known to be running by Chinese spies is a total dereliction of duty. And Nvidia claims that they placed Megaspeed on their "block list" and stopped shipping to them in 2025. But if that's the case, why is Megaspeed still listed on Nvidia's website as an official cloud partner? And did Nvidia also stop shipping to Speedmatrix, Megaspeed's subsidiary in Malaysia? This denial doesn't add up at all.

.@ChrisRMcGuire on China Talk. "the big question for Congress and for the administration is: how could the Commerce Department have known about this? Have known that Mega Speed is being run by Chinese spies and not done anything to stop the export of chips to them? $4.8 billion worth of chips, and they were sitting on information that said they're being run by Chinese spies, and those spies are actively trying to to penetrate Nvidia at the highest levels. It is baffling to me how they could have sat on that and done nothing..."

Great reporting here. Proud to be a target of this bot army, together with a great bipartisan group that includes @HouseForeignGOP, @SenWarren, @SenatorBanks, @ChrisVanHollen, @RepHuizenga, @RepKamlagerDove, @michaelsobolik,@hamandcheese, and many others.

Read @BuchananBen and @tantumscollins's new book on AI policy! Ben and Tantum are among the smartest thinkers on AI policy, and were two of my closest colleagues and friends in the White House. This is the perspective we need on one of the biggest policy issues the world faces.

More evidence that Commerce’s refusal to implement or enforce export controls may not be a directive coming from the White House. The White House is reportedly pushing to close the remote access loophole—potentially the single most important thing we could do right now to secure U.S. AI advantages over China—while Commerce leadership refuses to block companies literally run by Chinese spies from receiving AI chips, is not enforcing controls already on the books that are designed to prevent Chinese cutouts like Megaspeed from getting chips, and is actively interfering with ongoing law enforcement investigations involving Megaspeed and Nvidia. It’s stunning that the White House and Commerce could be on such different pages on export control policy. If the White House can’t get Commerce under control, then Congress has no choice but to launch an investigation into Commerce’s handling of these issues.

Strong bipartisan statement from @SenWarren and @SenatorBanks. Great to see continued bipartisan push for export control legislation, as well as calls for Commerce to separately close loopholes that Megaspeed and others are exploiting. Oversight on this should be bipartisan.

It is beyond inappropriate that leadership at the Department of Commerce apparently discussed an ongoing law enforcement investigation involving Megaspeed and Nvidia with Nvidia's General Counsel. It's clear that Congressional oversight is urgently needed here. To give an idea how bad this is: imagine if FBI agents were in the middle of a secret, long-running criminal investigation into a company, and FBI leadership discussed the status of that investigation with the General Counsel of the target company's primary business partner. That is no different than what apparently happened here. Law enforcement agencies (which include the Department of Commerce) cannot discuss ongoing investigations, and particularly not with companies directly or indirectly involved with cases. Everything about the way Commerce has handled Megaspeed's dealing with Nvidia is suspect. Commerce has shielded Megaspeed from regulatory action at every turn, and may have shielded Megaspeed from legal action as well. Now we know the reason why the Department of Commerce has still not blocked Megaspeed from receiving Nvidia chips: because the investigation inside Commerce into Megaspeed was halted entirely after Commerce communicated directly with Nvidia about it. And don't forget, the reason this happened is because Commerce is refusing to enforce EXISTING U.S. export controls, which would have prevented this. Current US export control regulations actually require Megaspeed, and any other non-trusted company in many countries, to get an export license from the Department of Commerce before they receive any large orders of AI chips. But Commerce publicly stated it will not enforce those regulations, and also has not bothered to replace them. Commerce could take action today to systematically solve this issue. It should: (1) immediately enforce the existing export control regulations that would require licenses for large AI chip shipments to non-trusted entities in Southeast Asia and other countries, such as Megaspeed; and (2) close obviously loopholes in controls that permit companies like Megaspeed to provide remote access of AI chips to China, or Chinese companies like Aivres (which is the US subsiary of the Entity Listed company Inspur, and provided Megaspeed with many of its Nvidia chips) to buy AI chips in the United States. Every day these loopholes persist, Congress must demand answers. Commerce's non-enforcement of export controls has metastasized into a major scandal, involving one of the largest companies in the world. Congress must prioritize this oversight, and it should be bipartisan. And Congress should immediately pass the many bipartisan bills that would tighten export controls and that are currently pending, such as the AI Overwatch Act, MATCH Act, Chip Security Act. These bills can't afford to wait, they should go today.

Great to be on @CNBCMorningCall with @MorganLBrennan this morning to discuss the latest developments regarding Nvidia, Megaspeed, and export controls--and what this means for export control policy going forward. Thank you for having me on!