The proposed law, called the Chip Security Act, would direct the Commerce Department to require a “location verification mechanism” on AI chips covered by export restrictions.
The proposed law, called the Chip Security Act, would direct the Commerce Department to require a “location verification mechanism” on AI chips covered by export restrictions. Under the bill, exporters would be obligated to report any instances of chips being diverted from their intended destinations or tampered with to the Commerce Department’s Bureau of Industry and Security (BIS).
“Expanding access to advanced technology can’t come at the cost of our national security,” Cotton wrote in a statement. “My Chips Security Act will prevent American chips from falling into the hands of adversaries like Communist China.”
The legislation comes just days after the Trump administration confirmed plans to repeal an AI diffusion rule enacted in the final days of former President Biden’s term. That rule imposed limits on chip sales to all but 18 U.S. allies, with the aim of reducing foreign competition in emerging tech fields.
The BIS criticized the rule earlier this week, calling it “overly complex” and warning it could hinder American innovation. White House AI and crypto advisor David Sacks also commented that the measure strained relationships with U.S. allies and overstepped export control authorities.
Leading U.S. technology firms, including Microsoft and Nvidia, have recently urged the administration to relax export restrictions. The issue underscores the growing challenge of balancing national security concerns with the competitiveness of American tech companies abroad.
Last month, the administration introduced new licensing requirements for high-performance chips such as Nvidia’s H20 and AMD’s MI308. Nvidia reported the rules could cost the company $5.5 billion, and is now preparing a modified version of its H20 AI chip to comply with the new guidelines.
TechEchelon Staff bylines are produced collectively by the newsroom for short, breaking, and wire-style coverage. Longer-form reporting is published under the responsible reporter's name.
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