The House Foreign Affairs Committee is scheduled to mark up the Chip Security Act (H.R. 3447) when it meets next. FDD Action urges Members to support this critical and bipartisan piece of national security legislation.
Led by Reps. Bill Huizenga (R-MI) and Bill Foster (D-IL), the Chip Security Act would require advanced chip manufacturers to implement technical security measures to detect and prevent smuggling to unauthorized countries and end-users. The Chinese Communist Party has repeatedly smuggled or diverted advanced U.S. chips to China to evade export controls and power AI models developed by Chinese companies. This bill would increase the effectiveness of export controls on advanced chips and make it more difficult for China and other U.S. adversaries to gain access to America’s most cutting-edge technologies. Sen. Tom Cotton (R-AR) leads the Chip Security Act (S. 1705) in the Senate.
FDD Action supports this bill and urges members of the House Foreign Affairs Committee to vote “Yes” during the next markup.
Legislation at a Glance
FDD Action Expert Analysis
“The United States is in a global AI arms race with the Chinese Communist Party, and advanced chips are the crown jewel of American innovation. The Chip Security Act would implement common-sense security measures to prevent these chips from being diverted to our adversaries. This bipartisan legislation is necessary to protect America’s AI leadership and defend our national security. FDD Action is proud to support the Chip Security Act.”
– Connor Pfeiffer, Senior Director of Government Relations, FDD Action
Why It Matters
- Chinese AI companies are circumventing U.S. export controls by smuggling advanced chips into China. On February 23, Reuters reported that DeepSeek, the leading Chinese AI company, trained its latest model on Blackwell chips – Nvidia’s most advanced AI chip – that were smuggled into China. U.S. export controls bar the sale of Blackwells to China. Additionally, Taiwan Semiconductor Manufacturing Company (TSMC) is under investigation after some of the company’s advanced chips were found inside Huawei’s high-end Ascend 910B AI processor, which would violate U.S. export controls.
- Location verification addresses a critical enforcement gap. Recent reporting from the Financial Times indicates that in a three-month period last year, more than $1 billion in controlled NVIDIA AI chips were smuggled into China. The Department of Commerce’s Bureau of Industry and Security (BIS), which is tasked with ensuring export control compliance, cannot keep up with diversion on this scale without technological solutions that require and enable companies to report potential diversion.
- China steals U.S. chips because Beijing is behind in the AI arms race. As Chris McGuire, a former U.S. official who worked on AI policy, explained, “The best U.S. AI chips are currently about five times more powerful than Huawei’s best offerings. By 2027, that gap will widen to seventeen times.” Chinese tech founders have explicitly stated that limits on accessing computing power, not money or engineers, are the main brake on scaling and innovation.
About the Legislation
The Chip Security Act would detect and prevent the smuggling of advanced chips to unauthorized countries and end-users by:
- Requiring advanced AI chips to have location verification mechanisms before export to ensure reliable verification of whether the chip has been illegally diverted.
- Directing Commerce to issue a rule to implement mandatory reporting of credible information about potential diversion of sensitive technology to restricted actors.
- Giving BIS enforcement authority over violations of the bill’s security requirements.
- Including a “robust stakeholder engagement process” in rulemaking to implement these provisions.
- Directing the executive branch to conduct an assessment identifying what enhancements, if any, should be used to improve the chip security mechanisms in the future.
- Requiring the Department of Commerce to assess the competitiveness of foreign advanced chips in relation to U.S. chips annually.
- Including a rule of construction that ensures required chip security mechanisms do not affect the functionality of advanced chips or cover chips exported for non-AI use cases.