US lawmaker targets Nvidia chip smuggling to China with new bill --- Reuters

A U.S. lawmaker plans to introduce legislation in coming weeks to verify the location of artificial-intelligence chips like those made by Nvidia after they are sold, aims to address reports of widespread smuggling of Nvidia's chips into China in violation of U.S. export control laws. Reuters reported.

A bipartisan effort to combat the smuggling of Nvidia's AI chips into China is gaining traction. U.S. Representative Bill Foster plans to introduce legislation in the coming weeks to verify the location of these chips after they are sold, addressing reports of widespread violations of export control laws [2].

The proposed legislation aims to tackle the growing concern that Nvidia's AI chips, critical components in creating advanced AI systems, are being smuggled into China. This is particularly pertinent following the release of China's DeepSeek, which posed a strong challenge to U.S. AI systems and was built using Nvidia chips prohibited for sale to China [1].

The bill, which has bipartisan support, will direct U.S. regulators to develop rules for two key areas: tracking the chips to ensure they remain within authorized export control regions and preventing improperly licensed chips from booting up. Foster, who has a background in particle physics and computer chip design, asserts that the technology to track these chips is already available and built into Nvidia's products [2].

Independent technical experts interviewed by Reuters concur, noting that the technology for location verification is readily available and already integrated into Nvidia's chips. Foster emphasized that the problem of chip smuggling is not hypothetical but an immediate issue, potentially leading to the development of weapons or advanced AI systems in China [2].

Nvidia, the world's largest supplier of AI infrastructure, has publicly stated that it cannot track its products after they are sold. However, Foster's bill seeks to address this gap by mandating that U.S. regulators establish rules for post-sale tracking and licensing verification [2].

This legislation comes at a critical time for Nvidia, which has already taken a financial hit due to the implementation of export controls. The company recently booked a $5.5 billion charge tied to these controls, highlighting the potential revenue loss if the Trump administration tightens the rules further [1].

The proposed bill is part of a broader effort to stifle China's advancements in AI and maintain U.S. leadership in semiconductor technology. While Nvidia faces potential revenue losses, companies like Anthropic, which develop AI models, may benefit from reduced competition and less risk of embarrassment from foreign AI systems [1].

References:
[1] https://www.theregister.com/2025/05/01/anthropic_limit_gpus/
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L6N3R90FV:0-us-lawmaker-targets-nvidia-chip-smuggling-to-china-with-new-bill/

Ask Aime: What impact will the new bill have on Nvidia's chip sales?