Nvidia Made a $25 Million Donation to Trump’s Ballroom. Results Now Realized.

Here’s a surefire way to get Trump’s support in one easy lesson.

National Security for Sale, Deep, Deep Discounts

The Wall Street Journal comments Donald Trump and Jensen Huang Have the Same Tragic Flaw

A sui generis figure and charismatic salesman, he led a juggernaut that seemed indomitable only a couple of years ago. Yet his blunders caused great damage to the institution he built and have left his achievements on shaky footing. He has no obvious successor. This could describe Nvidia founder Jensen Huang as well as it could President Trump.

The media has seized on Mr. Huang’s tragic story because it suggests failings by the Trump administration. Press reports say that Megaspeed, the company Mr. Huang’s Chinese paramour founded, might have assisted with smuggling Nvidia chips into China.

Since 2022, the U.S. government has restricted the sales of Nvidia’s top-line chips to China out of concern they could be used for nefarious military purpose. The restrictions have proved porous.

Have Commerce Department officials looked the other way at such regulatory evasions because Mr. Huang curried favor with the president, in part with a $25 million Nvidia donation to the White House ballroom project? That’s one plausible narrative.

Also plausible: Mr. Huang and other Nvidia executives looked the other way as their chips were being diverted to China or rented out by Megaspeed to Chinese companies. Nvidia desperately wanted to sell high-end chips to China and repeatedly warned that U.S. export controls could cause “material” harm to its business.

“Our competitive position has been harmed by export controls, and our competitive position and future results will be further harmed, over the long term, if the restrictions remain in place or are expanded,” Nvidia’s latest quarterly earnings report notes.

Likely, Not Just Plausible Explanations

Both explanations outlined by the WSK are plausible. I suggest likely. And they are not mutually exclusive.

The way to win Trump’s favor is two-fold, flattery and bribes.

Throw in a side tidbit to commerce secretary Howard Lutnick, and it’s easy to piece together how this mess happened.

Essentially, everyone was paid to look away.

The NVIDIA story is a BFD

Nate Silver explains The NVIDIA story is a BFD

Jensen Huang, the CEO of Nvidia, one of the world’s most valuable companies and perhaps the most strategically important corporation to the future of the United States, resigned after admitting to an extramarital affair with a woman U.S. intelligence officials believe was a Chinese spy.

This is a big fucking deal. Thanks, Captain Obvious. But my impression is that the political world is under-reacting to the Nvidia story. We’re overdue to have at least an initial newsletter covering it. I don’t expect this to become a Silver Bulletin obsession, but the overlap between politics and AI is well within our purview, and this story falls within those sightlines.

I’m going to do this as one of those “13 thoughts” bullet-pointed lists that can make for a nice shortcut for these developing news stories. The usual ground rule is that I’m working through my thinking with you in real time, so treat this as provisional. To be clear, this is political analysis, not a scandal explainer. For more about the scandal itself, read Zvi or listen to these recent editions of Odd Lots or Search Engine.

Basically, what those describe is that this story isn’t just about Jensen Huang having slept with an alleged Chinese agent, Alice Huang. As this New York Times graphic illustrates, there’s also a broader penumbra of suspicion related to a company called Megaspeed, which Alice Huang ran and which bought Nvidia chips through Nvidia’s hardware partners. U.S. authorities began investigating Megaspeed in 2024, during the Biden administration, over whether it diverted advanced Nvidia chips to China in violation of U.S. export controls. The Commerce Department’s work on the probe was paused in late 2025, and the case was “abruptly transferred” to the Justice Department, the Times reported.

Nate Silver’s Key Takeaways

• #4: I don’t think AI was among the three most important issues in the midterm, but it was in the top 10. The most pro-data center governor in the country, Greg Abbott, lost by 7 points in Texas. Polling before the election provided some evidence that Republicans were performing especially poorly in communities near data centers. Almost every municipal ballot initiative to restrict data-center construction won. Some of this is really about a nexus of concern surrounding cronyism and corruption, anti-billionaire sentiment, and distrust toward Big Tech rather than AI specifically. But the Nvidia story hits that nexus hard.
• #5: For political forecasting purposes, what we’re really talking about is a series of tail risks: a) toward market sentiment and spillover into the broader economy; b) toward America’s relationship with China and the possibility of escalation of various kinds; and c) toward shady dealings by the White House. None of these are remote, 2 percent tail risks; they’re tangible.
• #8: The safest bet of all is that there are going to be a lot of investigations about Nvidia and Megaspeed. Senate Banking Committee Chair Tim Scott has already asked Huang to testify to Congress. Treasury Secretary Scott Bessent is already throwing Commerce Secretary Howard Lutnick under the bus. But there are also going to be a lot of Dem-initiated investigations about everything starting in January. A big question is how focused those investigations will be versus seeming like wild-goose chases, which can backfire. The Nvidia story and AI generally present a potential focal point for those investigations.
• #9: Another question is: what is the ratio of smoke-to-fire as it concerns any misconduct by Trump or the White House? The Trump administration is spectacularly corrupt. It is responsible to speculate about this and treat this as a material risk factor heading into 2028. The White House deals itself into a lot of things. Nvidia, along with other Silicon Valley behemoths, donated toward the construction of the White House ballroom. That alone is probably not going to have a profound effect on the 2028 election. But was there more self-dealing in ways that can be credibly demonstrated to a busy and skeptical public?
• #11: Trump’s Teflon image has worn off. He will never regain quite the same ability to intimidate anyone when Republicans just lost a Senate seat in Mississippi.
• #13: But the Nvidia story is also tragic on many levels. It is/was a legitimately great, underdog American corporation. And Jensen Huang, I’d thought, was one of the good guys. (I didn’t know him personally, but had one private conversation with him earlier this year.) While I thought his public takes on AI risk were kind of bad, I found his vision of an AI-empowered future more compelling than the one offered by the major AI labs, about which I feel profoundly ambivalent. (I’ll hopefully have more to say about that soon.) I’m not going to extrapolate my feelings to the broader public, but it’s hard not to feel more cynical.

Silver had 13 takeaways. The above six, especially his points 8 and nine stand out above the rest.

This ballroom donation thing is a very big deal and it has not played out yet.

Neither has Lutnick’s role in this scandal.

Lutnick Pushed to Weaken Chip Rules That Overlap With His Family Business

The New York Times reports Lutnick Pushed to Weaken Chip Rules That Overlap With His Family Business

The commerce secretary has been writing new rules that would affect Southeast Asian data centers, some of which are clients of his former firm.

In Malaysia’s lush southern peninsula, a data center known as A201 is set to open next year, packed with hundreds of millions of dollars in Nvidia’s most advanced artificial intelligence servers.

The data center plans to supply this computing power to a Chinese tech giant. The setup is legal and profitable. It will also sidestep U.S. rules that ban sales of the most advanced A.I. chips directly to Chinese firms.

The company operating the data center is a client of Cantor Fitzgerald, the financial services firm formerly led by Howard Lutnick, the commerce secretary, who handed off leadership of it to his sons. Mr. Lutnick is now writing the rules that would have a substantial effect on the data center’s business.

Recently, Mr. Lutnick has been advocating a less stringent version of those controls under consideration, which could cut back on Nvidia’s business by giving the U.S. government more oversight of chip sales to international data centers. It is the latest example of Mr. Lutnick’s soft touch on chip regulation, which has prompted criticism from lawmakers and others in the administration.

Mr. Lutnick steered Cantor Fitzgerald for decades, before recusing himself when he joined the Trump administration last year. The Commerce Department says Mr. Lutnick has complied with all ethics agreements, and his former business is now run by his sons.

The overlapping relationships are the latest indication of the potential conflicts that exist given Mr. Lutnick’s role in shaping rules around U.S. technology exports. And they demonstrate how the U.S. ban on selling chips directly to China has led to an explosion of data centers in Southeast Asia aimed at Chinese customers. 

Even after Mr. Lutnick finished transferring his ownership stake to his sons late last year, he still had to abide by an ethics rule prohibiting federal employees from using their public office for their private gain or the gain of friends and relatives.

The Times reported last year that Mr. Lutnick was promoting data center projects that worked with his family firms.

Lutnick Thrown Under the Bus

Silver commented “Maybe in a few years, we’ll use the term ‘Lutnicked’ to describe someone who got thrown under the bus.”

CNN Comments Lutnick Under Fire.

The first call, as Jensen Huang remembers it, came from Howard Lutnick.

It was around the start of Donald Trump’s second term, and Lutnick was preparing to become his Commerce Secretary. His message to the head of Nvidia was simple: whenever you need the president, call us.

Recounting the call on Joe Rogan’s podcast last December, Huang remembered fondly that Lutnick had called him and his company “a national treasure.”

Some of Trump’s advisers, reeling from the fallout of Huang’s resignation, have begun discussing whether Lutnick should be dismissed, according to people familiar with the conversations.

This account is derived from more than a dozen sources, including officials inside the administration and the tech industry. They described a rapidly deepening relationship that came to influence nearly all areas of the White House’s stance toward some of the most powerful technology in the world.

‘What the hell is Nvidia?’

Until shortly after Trump’s inauguration last year, Huang was nearly a stranger to Trump’s world.

Trump, by his own account, had barely heard of Nvidia or its CEO: “What’s his name? What the hell is Nvidia?” he recalled wondering a few months later. “I’ve never heard of it before.”

His ignorance wouldn’t last long. Eleven days after being sworn in for a second term, Trump met Huang at the White House. Huang also met that day with Lutnick, still awaiting confirmation as Commerce Secretary. 

On Thursday, after Huang resigned from Nvidia following revelations he had extramarital affairs with two women, one of whom may be connected to China, Lutnick’s critics began circling. Administration officials who have long been concerned about Huang’s influence on Trump said privately that the Commerce Department failed to crack down on chip shipments to companies suspected of passing them on secretly to China.

Speaking on CNBC Friday, Treasury Secretary Scott Bessent said a wide swath of Trump’s administration — including the Treasury and State departments, the Pentagon and the US Trade Representative — favored placing the company at the center of the scandal, Megaspeed, on an export blacklist. He said it was the Commerce Department, led by Lutnick, that had failed to follow through.

“Commerce…has the pen…and you will have to ask them about their internal process,” he [Bessent] said.

“I think he should be fired,” Sen. Chris Van Hollen told ABC News in an interview that aired Sunday. Van Hollen, the top Democrat on the Senate subcommittee that oversees Commerce Department funding, is running to be Senate majority leader in the next Congress.

“This news is as concerning as it gets,” Sen. Jim Banks, a Trump ally, said Thursday on Fox News. “When you’re in a war with another country, you don’t give them your best technologies. And that’s why lawmakers, for the last two years, have been pushing hard to stop our high-end computer chips from being exported to China.”

The Warnings

In the summer of 2025, as Trump and Huang were growing closer, a phone call began to unravel something larger. Singapore police, investigating a cloud company called Megaspeed, questioned its former managing director, Alice Huang, and barred her from leaving the country. She had met Jensen Huang at an Nvidia event in California in early 2024. The two were photographed together at a trade show in Taipei that June.

During a briefing with lawmakers on Capitol Hill at the end of 2025, federal agents said they suspected Jensen Huang was the “target of a foreign intelligence effort,” citing his close relationship with Alice Huang, according to sources familiar with the meeting.

Trump himself had been briefed on intelligence about Alice Huang in late 2025 and took no action, CNN previously reported. 

The Commerce Department had been investigating Megaspeed since 2024 to determine whether the firm had run afoul of US export rules, but had stopped short of placing the company on the so-called Entity List, a trade blacklist that bars US suppliers from selling to listed firms without a license.

On Capitol Hill, Senate Intelligence Committee Chairman Tom Cotton, an Arkansas Republican, had taken notice and quickly fired off a direct request to Lutnick to investigate Megaspeed. 

They got no substantive response. And in meetings when the case came up, Lutnick’s deputies would respond by telling officials little more than it was Lutnick’s decision to make, according to people familiar with the conversations.

In the CNBC interview Friday, Bessent suggested the inaction had violated directives given by Trump himself.

“I am frustrated when President Trump made it very clear that China should not receive any Nvidia chips above H100s,” Bessent said, referring to an older-generation data-center chip. “And so any leakage is very frustrating because it hurts our great companies in the AI race, gives the Chinese an advantage.”

“Shame on Lutnick for allowing that exposure to happen for the president. Raises a question about what other ones are out there,” Sen. Thom Tillis told reporters Thursday.

During a meeting in the Situation Room last week, Treasury Secretary Bessent turned to Lutnick and asked why Megaspeed wasn’t on the entities list. According to sources familiar with the meeting, Lutnick stammered, “I don’t know. I’ll look into it.”

Question of the Day

Q: How much Trump care about what Lutnick did?
A: Hardly at all.

Q: What!?
A: Yes, seriously. Trump is concerned Lutnick got caught, not what he did.

Trump is not concerned about corruption until it boils over. Lutnick just got caught and a scandal is brewing.

Bessent’s Revenge

Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick have been at the center of intense rivalry and public confrontations, though reports point to heated verbal clashes and political turf wars rather than an actual physical fistfight.

• The Treasury Job: During the post-election transition in late 2024, Lutnick aggressively campaigned to lock down the Treasury Secretary role for himself, leading to an intense “knife fight” with Bessent.
• The Outcome: President Trump ultimately selected Bessent for Treasury and nominated Lutnick to lead the Commerce Department, setting up persistent friction between the two economic chiefs. Reports noted that tensions during this period included explosive private remarks.

While Bessent has been involved in separate reports of near-physical altercations with other figures—such as FHFA chief Bill Pulte at a private club—his clashes with Lutnick have centered on policy, cabinet turf, and high-stakes economic intelligence disputes rather than a physical brawl.

What to Expect from Trump

“As always, should you or any of your IM Force be caught or killed [or implicated in a scandal], the President will disavow any knowledge of your actions. This tape will self-destruct in 5 seconds.”

Lutnick will be Lutnicked pronto. Trump will disavow any involvement or knowledge.

Where There’s Profit, There’s a Way!

Sanctions and export restrictions, don’t work. They never have and won’t.

There is too much profit somewhere to expect anything but failure.

Please recall my August 26, 2024 post China Gains Secret Access to Nvdia Microchips by Renting Computers

The US has blocked export of Nvdia chips to China. But where there’s profit, there’s a way.

Know Your Customer’s Customer’s Customer

China sets up an AI company in Singapore.

AI developers buy cloud time through a subsidiary that further masks the operation by paying in Bitcoin.

In turn, the subsidiary buys time from a company Dubai or Singapore that hosts the servers.

US politicians outraged. But some of us are amused knowing full well that sanctions don’t work.

Massive Failure of Sanctions

September 19, 2023: Lesson of the Day: Sanctions Don’t Work Because They Create New Markets

December 29, 2023: How Russia Makes a Mockery of US Sanctions in One Picture

February 19, 2024: US Impounds Thousands of German Vehicles Over One Tiny Part Made in China

May 21, 2024: Another Sanction Failure: The US Blacklisted Xiaomi Three Years Ago Now it Makes EVs

That sanctions and export controls fail is no excuse for breaking the law, taking corrupt donations, and making deals that only benefit yourself and your family.

Lutnick is one of the worst cabinet officials in this worst in history Trump administration. Lutnick’s name and face are also rampant in the Epstein files.

He is going down hard in the tidal wave of investigations that will start shortly.

Looking Back and What’s Ahead

I believe it’s safe to say I predicted this latest sanction failure although I did not foresee a 3-way sex scandal involving a Chinese spy, payouts to Trump, and corrupt deal makings by the US Commerce Secretary. But I can tell you what’s ahead.

Q: OK Mish, what’s ahead?
A: A movie of course. Count on it. Trump will howl.

Related Posts

September 19, 2023: Lesson of the Day: Sanctions Don’t Work Because They Create New Markets

Countries, political leaders, and market makers act in their best interest.

It is in the best interest of Greek shippers to sell ships so they do. It is in the best interest of India and China to buy Russian oil and Greek ships so they do.

It is in the best interest of Dubai middlemen to make a market in ships so they do.

What this boils down to is simple: It is the best interest of middlemen in Greece, Russia, India, China, and Dubai to tell Biden to go to hell, so they do.

February 18, 2024 : How China Gets Around US Sanctions on Semiconductors

US sanctions backfire again. China is stronger as a result.

The Incentive to Break Sanctions

China lags the US in technology, but the direct result of sanctions is China now produces its own chips instead of buying them from the US.

As Politano notes “The US is continually playing whack-a-mole to wrangle the trading firms that enabled those acquisitions.”

And US imports of semiconductor equipment, despite the Inflation Reduction Act is behind China’s imports of semiconductor equipment.

Well, at least we will get a good movie out of this.