TLDR:
- US Representative Bill Foster plans to introduce legislation to track Nvidia AI chips after sale
- The bill aims to prevent smuggling of advanced chips to China in violation of export controls
- Technology would verify chip locations and prevent bootup of improperly licensed chips
- China generated $17 billion (13% of total) in Nvidia’s last fiscal year
- Reports suggest widespread smuggling already occurring despite existing export restrictions
U.S. Representative Bill Foster from Illinois is preparing to introduce new legislation in the coming weeks aimed at tracking Nvidia’s artificial intelligence chips after they are sold. The bill targets the growing problem of chip smuggling to China in violation of U.S. export control laws.
This legislation would direct U.S. regulators to develop rules for tracking chips to ensure they are where they are authorized to be under export control licenses. It would also prevent chips from booting up if they are not properly licensed.
Foster, a Democrat and former particle physicist who has designed computer chips, believes the technology to track these components is already available. Much of it is already built into Nvidia’s chips, according to Foster and independent technical experts.
The bill has gained support from other Democrats, including Representative Raja Krishnamoorthi, the ranking member on the House Select Committee on China. Republicans are also expected to back the legislation once it’s introduced.
“This is not an imaginary future problem,” Foster told Reuters. “It is a problem now.”
How the Technology Works
The proposed tracking system would rely on chips communicating with a secure computer server. This server would use the time it takes for signals to reach it (traveling at the speed of light) to verify where chips are located.
Tim Fist, a former engineer and director of emerging technology policy at the Washington think tank Institute for Progress, explained that such tracking would provide a general, country-level location for chips.
While this doesn’t offer precise locations, it gives the Bureau of Industry and Security more information than they currently have about exported chips.
Google already uses similar technology to track the location of its in-house AI chips and others in its data centers for security purposes, according to sources with direct knowledge of its operations.
China’s Role in Nvidia’s Business
China represents a substantial portion of Nvidia’s business. In the company’s last fiscal year ending January 26, China generated $17 billion in revenue, accounting for 13 percent of Nvidia’s total sales.
The smuggling issue has become more urgent following the emergence of China’s DeepSeek, whose AI systems reportedly used prohibited Nvidia chips to create technology that rivals U.S. systems.
Both the Trump and Biden administrations have implemented increasingly strict export controls on Nvidia’s chips to China. The Trump administration recently introduced new measures placing additional restrictions on chip sales to the nation.
Prosecutors in Singapore have already charged three people, including one Chinese national, with fraud in a case involving servers that may have contained smuggled Nvidia chips.
Representative John Moolenaar, who chairs the House Select Committee on China, supports the concept of location tracking. “The Select Committee has strong bipartisan support for requiring companies like Nvidia to build location-tracking into their high-powered AI chips,” Moolenaar told Reuters.
Nvidia’s chips are critical components for creating AI systems such as chatbots, image generators, and potentially more specialized technologies.
Shares in the semiconductor giant were lower in U.S. premarket trading on Tuesday following the news of the upcoming legislation.
Foster’s bill would give the U.S. Department of Commerce six months to develop regulations requiring this tracking technology. The proposed verification technology is seen as less complex to implement than the chip boot-up restrictions, though Foster believes both efforts should move forward.
Nvidia declined to comment when asked about the proposed legislation.
The news comes as U.S. lawmakers from both parties continue to show strong support for controlling the flow of advanced technology to China. Foster’s proposed legislation represents the latest effort to tighten these restrictions and ensure compliance with existing export controls.
