In a decisive move to protect its technological dominance, the United States has introduced the Chip Security Act, a new bill aimed at curbing the illegal transfer of AI chips and semiconductor technology to foreign adversaries, particularly China. Spearheaded by Senator Tom Cotton, the legislation mandates that all export-controlled AI chips include embedded location verification mechanisms, ensuring these high-value components remain traceable even after leaving American soil.
The bill tasks the U.S. Department of Commerce with establishing this tracking system within six months of enactment. Exporters will also be required to report suspicious activity to the Bureau of Industry and Security (BIS), while the Commerce Department, in coordination with the Department of Defense, will evaluate additional safeguards in the coming years. These measures are designed to evolve alongside semiconductor development cycles and the changing geopolitical environment.
Backed by bipartisan interest, a corresponding bill is expected to be introduced in the House by Congressman Bill Foster. This legislative push follows reports of U.S.-origin chips circumventing existing export controls and reaching unauthorized entities in China.
While the Chip Security Act underscores Washington’s growing urgency to prevent American technologies from empowering rivals, it arrives amid resistance from the tech industry. Companies like NVIDIA, which has already reported potential revenue losses of $5.5 billion due to halted China-bound sales, argue that current export controls are excessively restrictive and stifling innovation. To adapt, NVIDIA is redesigning products, like the H20 chip, to comply with U.S. regulations without losing market relevance.
At the heart of the debate lies the challenge of balancing national security with economic competitiveness. The Chip Security Act signals a new chapter in the U.S.–China tech standoff, one where legislation, surveillance, and policy innovation converge in the battle for global technological supremacy. Its success will hinge on whether it can deter tech smuggling without undermining U.S. leadership in innovation.