AI Chips Now Traceable: New U.S. Bill Mandates Built-In Tracking to Crush Black Market and Combat Tech Smuggling

The United States has taken a bold step to safeguard its technological edge by introducing the Chip Security Act. This legislative move seeks to prevent unauthorized access to American semiconductor technology, primarily targeting adversaries like China. The bill, introduced by Senator Tom Cotton, comes at a time when tensions between the U.S. and China have escalated, particularly in the realm of artificial intelligence and chipmaking. It aims to embed location verification into exported AI chips, a measure designed to avert unauthorized diversions or tampering. As the global tech race intensifies, this legislative effort underlines the critical role semiconductors play in national security.

What the Chip Security Act Proposes

Senator Tom Cotton has emphasized that national security cannot be compromised for expanded access to advanced technology. The Chip Security Act mandates the U.S. Department of Commerce to implement a location verification mechanism within six months of the bill’s enactment. This mechanism will be pivotal in tracking the whereabouts of export-controlled AI chips and any products that embed such technology. By doing so, the Act aims to detect and prevent any unauthorized transfers or tampering attempts.

Furthermore, exporters will be required to report any suspicious activity to the Bureau of Industry and Security (BIS). The bill also calls for the Commerce Secretary, in collaboration with the Department of Defense, to study additional chip security mechanisms over the coming years. These studies will inform whether further security measures should be mandated for advanced chips, reflecting the multi-year development cycles inherent in semiconductor design. Additionally, the legislation requires annual assessments and recommendations to enhance export control frameworks, ensuring they remain responsive to the evolving geopolitical landscape.

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Cross-party Support and Parallel Legislation

The Chip Security Act has garnered attention across party lines, highlighting the growing bipartisan concern over unauthorized chip exports reaching China. Congressman Bill Foster from Illinois is reportedly preparing to introduce a complementary measure in the House, emphasizing the urgency felt in Washington. This legislative interest stems from reports that restricted chip exports continue to find their way into China, despite existing regulations.

Such cross-party efforts underscore the consensus on the need for robust security measures to protect American technological advancements. The introduction of the Chip Security Act comes at a crucial juncture, as lawmakers strive to balance fostering innovation with safeguarding national interests. As the legislative process unfolds, the bill’s provisions will likely spark further debate on the best strategies to ensure that American semiconductor technology does not bolster adversarial capabilities.

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Trump-era Rollback and Industry Blowback

The introduction of the Chip Security Act coincides with significant industry pushback against existing export controls, which many argue are too complex and detrimental to U.S. companies. Notably, NVIDIA has disclosed potential revenue losses amounting to $5.5 billion due to halted sales to China. In response, the company is developing a modified H20 chip to comply with U.S. regulations while maintaining its competitive edge in global markets.

The Biden-era export controls have been criticized by industry leaders and the Bureau of Industry and Security (BIS) for being overly bureaucratic and stifling innovation. Prominent tech companies, including Microsoft and NVIDIA, have urged the government to reconsider these broad regulatory measures. As the debate continues, the Chip Security Act’s introduction adds another layer of complexity to the ongoing discourse on how best to protect national security without hampering technological progress.

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The Future of U.S.–China Tech Rivalry

The Chip Security Act represents a new phase in the U.S.–China tech rivalry, characterized by legislative action, enhanced supply chain surveillance, and strategic political maneuvering. As both nations vie for supremacy in the rapidly evolving fields of artificial intelligence and semiconductor technology, the stakes have never been higher. The Act’s focus on embedding location verification systems into AI chips is a testament to the importance of securing technological assets.

While the U.S. strives to protect its technological advantages, questions remain about the broader implications of these measures. Will they effectively prevent unauthorized access to American technology without stifling innovation and trade? As the global tech landscape continues to shift, the answers to these questions will shape the future of international relations and technological development.

As the Chip Security Act moves through the legislative process, it remains to be seen how effectively it will address the challenges it seeks to tackle. The ongoing U.S.–China tech rivalry and the global semiconductor race underscore the importance of striking a delicate balance between security and innovation. How will these legislative efforts shape the future of technology and international relations in the coming years?

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