US pushes world's first location-tracked AI chip law to counter China threat

Yahoo

19-05-2025

The United States has intensified its tech crackdown on China with a new legislative push that aims to tighten control over where advanced AI chips end up.
On May 9, Senator Tom Cotton (R-Arkansas) introduced the Chip Security Act, a bill designed to prevent adversaries like China from accessing American semiconductor technology through unauthorized diversions or tampering.
The move adds a new front in the long-simmering U.S.–China tech war, which has seen sweeping export bans, corporate compliance overhauls, and retaliatory restrictions as both nations vie for supremacy in artificial intelligence and chipmaking.
The bill arrives just days after former President Donald Trump announced plans to repeal the Biden-era "AI diffusion rule," which had restricted chip exports to most countries except key allies.
'Expanding access to advanced technology can't come at the cost of our national security,' Cotton wrote Friday on social platform X. 'My Chips Security Act will prevent American chips from falling into the hands of adversaries like Communist China.'
The legislation would require the U.S. Department of Commerce to implement a 'location verification mechanism' on export-controlled AI chips and any products that include them, within six months of enactment.
These systems would allow companies to track the chips' whereabouts and detect unauthorized transfers or tampering attempts. Exporters would also be required to report any such activity to the Bureau of Industry and Security (BIS).
Beyond that, the bill tasks the Commerce Secretary, with input from the Department of Defense, to study other potential chip security mechanisms and determine, over the next several years, whether they should be mandated on advanced chips.
The longer timeline reflects the multi-year development cycles in next-generation semiconductor design.
The legislation also requires an annual assessment of emerging security mechanisms for the next three years. Based on these assessments, the authorities must determine whether new security features should be mandated for advanced chips.
Additionally, the bill mandates yearly recommendations on how to make export control frameworks more flexible. The goal is to streamline shipments to friendly countries while tightening restrictions on adversaries.
Senator Cotton's bill is expected to receive attention from both sides of the aisle.
Congressman Bill Foster (D-Illinois) is reportedly preparing to introduce a similar measure in the House.
Both efforts reflect growing concern in Washington over reports of restricted chip exports still making their way into China, despite current regulations.
The bill's introduction also coincides with mounting industry pressure to ease complex restrictions that many claim are harming U.S. companies. NVIDIA recently disclosed it could lose $5.5 billion in revenue because of halted sales to China.
The company is now reportedly working on a modified H20 chip that would comply with U.S. rules while maintaining its foothold in global markets.
In a recent statement, the BIS called the Biden-era export controls 'overly complex, overly bureaucratic,' adding that they stifle innovation.
Tech giants like Microsoft and NVIDIA have also urged the government to reconsider the broad scope of current regulations.
The U.S.–China tech rivalry is entering a new phase, driven by legislative action, supply chain surveillance, and political maneuvering.
Whether these measures protect American tech without stifling innovation or trade remains to be seen.