In a rare display of bipartisan cooperation, House lawmakers introduced the Chip Security Act on May 15, targeting the flow of advanced American AI chips to China through smuggling networks and regulatory loopholes.
The legislation, spearheaded by House Select Committee on China Chairman John Moolenaar (R-MI) and Ranking Member Raja Krishnamoorthi (D-IL), along with six other representatives from both parties, comes in response to mounting evidence that Chinese entities have been evading U.S. export restrictions imposed since 2022.
"For too long, the Chinese Communist Party has exploited weaknesses in our export control enforcement system—using shell companies and smuggling networks to divert sensitive U.S. technology that helps fuel its military advancement and extend its surveillance capabilities," said Chairman Moolenaar in a statement.
The bill outlines three key enforcement mechanisms: real-time location verification technology embedded in advanced chips to track their whereabouts; mandatory reporting requirements for chipmakers to alert authorities about suspicious transactions or diversion attempts; and enhanced safeguards developed by the Commerce Department, such as encryption and tamper-proof designs.
This House bill complements companion legislation introduced in the Senate by Tom Cotton (R-AR) on May 8, which similarly calls for location-tracking systems in export-controlled AI chips. The technology would rely on chips communicating with secured servers to verify their location based on signal transmission times.
The legislation responds directly to recent developments in China's AI landscape. In January 2025, Chinese AI company DeepSeek launched a model that rivals Western offerings despite export controls, reportedly by stockpiling Nvidia chips before restrictions tightened and developing innovative techniques to maximize performance with limited computing resources. Similarly, Huawei has produced advanced AI chips through domestic manufacturing and shell companies that circumvent U.S. restrictions.
While the bill enjoys broad support, questions remain about its technological feasibility and potential impact on legitimate global chip markets. Industry experts note that implementing robust tracking systems without compromising chip performance presents significant engineering challenges, and some worry about unintended consequences for U.S. competitiveness in global markets.