In a move to curb the smuggling of chips made by Nvidia into China, a US lawmaker is pushing for a new bill, coming in the next few weeks, according to a Reuters report.
According to the report, the proposal has been pushed to address growing national security concerns as US-made chips continue to find their way in the Asian country, despite imposed embargoes on such.
The legislation will track Nvidia chips post-sale
Such legislative proposals show a growing emphasis on technology export controls amid threatening US-China tensions driven by a vicious trade war. Through utilising existing tracking technology in AI chips, the bill aims to ensure these chips remain within authorised areas as per export licenses.
With the Commerce Department facing a six-month deadline to develop these regulations, there is a clear urgency in securing America’s technological lead and addressing potential security gaps, according to Reuters.
The proposed law, shows that it is very difficult and virtually impossible to prevent unauthorised use, necessitating innovative technical workarounds.
It has come to light that Nvidia’s chips have been smuggled constantly into China in violation of US export control laws. The report has led to bipartisan support from US lawmakers to make sure the chips stay in countries permitted to have them.
The AI chips are a critical component for creating AI systems such as chatbots, image generators, and more specialised ones that can help craft biological weapons. Both President Donald Trump and his predecessor, Joe Biden, have implemented progressively tighter export controls of Nvidia’s chips to China.
News organizations have managed to show how chips are being moved across countries until they reach China. The chips have done brisk business on Chinese markets via the back door amid US export bans.
The chipmaker has also confirmed that it is unable to track where their chips end at after they have sold them.
Bill Foster, a House Representative from Illinois who once worked as a particle physicist, told the house that technology to track movement of chips after being sold by Nvidia is available. And it is argued that the chips already have the particles to enable it.
Foster admits there is an existing smuggling problem
The Democrat Foster, in an interview with Reuters said there are already credible reports of chip smuggling occurring on a large scale. According to him, some have not been publicly disclosed.
“This is not an imaginary future problem.”
Foster.
“It is a problem now, and at some point, we are going to discover that the Chinese Communist Party, or their military, is busy designing weapons using large arrays of chips, or even just working on (artificial general intelligence), which is as immediate as nuclear technology,” he added.
According to SemiAnalysis, a firm that specialises in AI technology, chip smuggling has taken on a new direction after the coming of DeepSeek, built around the Nvidia chips that are prohibited from being sold to China.
The proposed legislation, therefore, reflects persistent challenges in enforcing export controls, particularly for dual-use technologies with civilian and military applications.
While Foster asserts existing tracking technology makes implementation feasible, practical enforcement across global supply chains remains uncertain. The six-month rule-making period provides flexibility but risks being outpaced by technological developments.
The bill could accelerate the development of chip-tracking standards across the semiconductor industry, potentially affecting global AI hardware supply chains. Nvidia’s market position as a leading AI chip supplier makes it particularly exposed to regulatory changes. Successful implementation might prompt similar measures for other sensitive technologies, while failure could lead to stricter export controls.
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