US Explores Tracking Chips to Curb Flow to China

The US is exploring ways to track the flow of AI chips, particularly those made by Nvidia, to China. The White House is looking to curtail the export of these advanced chips to China. Director of the White House Office of Science and Technology Policy, Michael Kratsios, says the US is considering equipping chips with better location-tracking capabilities.

The United States is considering equipping Nvidia's advanced AI chips with enhanced location-tracking capabilities as part of its strategy to monitor the flow of these semiconductors to China. This initiative is part of a broader effort by the White House to curtail the export of these advanced chips to China, aiming to maintain the country's technological edge.

Director of the White House Office of Science and Technology Policy, Michael Kratsios, announced that the US is exploring ways to implement better tracking mechanisms in AI chips, particularly those made by Nvidia. This move comes amidst increased scrutiny from Beijing regarding the potential national security risks posed by Nvidia's H20 graphics processing units (GPUs) [1].

Washington allowed Nvidia to resume sales of its H20 AI chips to China in July 2025, reversing an effective ban imposed in April. China is one of Nvidia's largest markets, particularly for data centers, gaming, and artificial intelligence applications. However, the AI chips have attracted significant scrutiny from Chinese regulators, who have expressed concerns about potential security vulnerabilities and the inclusion of "backdoors" in the chips [1].

Nvidia has denied any such security concerns, stating that its chips do not contain "backdoors" that would allow unauthorized access or control. The company has been cooperating with Chinese officials to address their concerns and clarify any potential security risks associated with its H20 computing chips [1].

The US government's decision to allow Nvidia's H20 AI chip exports to China is part of a strategic move to prevent China from gaining an advantage in the global race for advanced semiconductor technology. White House National Economic Adviser Kevin Hassett explained that the decision to permit these chip exports was made to avoid China from innovating and making its own chips if cut off from US supplies [2].

However, the White House is now considering equipping these chips with better location-tracking capabilities to monitor their flow to China. This move is intended to provide the US with more control over the export of advanced AI chips and to mitigate any potential security risks associated with these semiconductors [1].

The decision to equip Nvidia's AI chips with enhanced tracking capabilities is part of a broader effort by the US to balance its technological relationship with China. The US is trying to prevent China from gaining an unfair advantage in the global semiconductor market while also ensuring that China has access to essential technologies.

Nvidia's CEO, Jensen Huang, has been navigating the complexities of US-China relations, balancing the company's desire to sell to the lucrative Chinese market with Washington's semiconductor policies. The resumption of H20 chip sales to China could unlock significant revenue for Nvidia, with analysts estimating that the company could add billions of dollars to its sales if the chips are approved by US regulators [3].

However, the potential for regulatory risks and increased competition from domestic alternatives in China could pose challenges for Nvidia. The company will need to maintain its U.S. licensing to ship advanced chips and continue to innovate to stay ahead of its rivals.

References:
[1] https://www.cnbc.com/2025/07/31/china-probes-nvidia-h20-chips-for-tracking-risks.html
[2] https://www.reuters.com/world/china/us-allowed-nvidia-chip-shipments-china-go-forward-hassett-says-2025-07-29/
[3] https://www.benzinga.com/analyst-stock-ratings/reiteration/25/08/46832344/nvidia-could-add-billions-from-china-sales-if-h20-gpus-get-green-light-from-us-analyst