America’s quest to protect semiconductor technology from China has been undergoing dramatic turns from export bans to global restrictions over the past few years, but there has been a latest proposal from Congressional ventures to unprecedented territory.
Lawmakers are currently pushing for essential GPS-style tracking embedded in all AI chips exported from the US, turning essentially sophisticated semiconductors into devices reporting where to return to Washington.
On May 15, 2025, a bipartisan group of representatives of eight homes introduced the CHIP Security Act. This requires companies such as NVIDIA to embed location verification mechanisms in their processors before exporting.
This probably represents the most invasive approach in technological competition with the United States, far beyond limiting where chips are actively monitored where they go.
AI chip surveillance mechanism
Under the proposed CHIP security law, AI chip monitoring is mandatory for all “covered integrated circuit products”, including those classified under export control classification numbers 3A090, 3A001.Z, 4A090, and 4A003.z. Companies like Nvidia need to embed location verification mechanisms in AI chips prior to export, re-export, or domestic transfers to foreign countries.
“We must hire safeguards to ensure export controls are not circumvented, allowing these sophisticated AI chips to fall into the hands of malicious actors,” said Bill Huizenga, a Republican of Michigan, who introduced the House bill.
His co-lead, representative Bill Foster, a Democrat in Illinois and former physicist who designed the chip during his scientific career, said, “I know there are technical tools to keep powerful AI technology from getting it wrong.”
This law goes far beyond simple location tracking. Companies face ongoing monitoring obligations necessary to report reliable information about chip repurpose, such as location changes, fraudulent users, and tampering attempts.
This creates a continuous monitoring system that expands indefinitely beyond sales points, fundamentally changing the relationship between the manufacturer and its products.
Cross-party support for technology control
Perhaps what’s most impressive about this AI chip surveillance initiative is its bipartisan nature. The bill enjoys widespread support across the party line, co-led by China’s Speaker John Mourenar and ranking member Raja Krishnamoorti. Other co-hosts include representatives Ted Liu, Rick Crawford, Josh Gottimer and Darrin Lahod.
“The Chinese Communist Party is using shell companies to smuggle networks and exploiting the weaknesses of its export control enforcement systems to distract sensitive US technologies,” Moolenaar said.
The bipartisan consensus on AI chip surveillance reflects how deeply China’s challenges are permeated by American political thinking, and goes beyond traditional partisan divisions.
The Senate has already introduced similar laws through Senator Tom Cotton, suggesting that semiconductor surveillance has broad Congressional support. Coordination between chambers indicates that some form of AI chip surveillance could become law, regardless of which party control the Congress holds.
Technical challenges and implementation questions
Technical requirements for implementing AI chip monitoring raise important questions about feasibility, security, and performance. The bill requires that chips implement “location verification using viable and appropriate techniques” within 180 days of enactment, but provides little detail on how such mechanisms work without compromising chip performance or introducing new vulnerabilities.
For industry leaders like Nvidia, implementing essential monitoring technologies can fundamentally change the design and manufacturing process of products. Each chip requires built-in functionality to verify its location, additional components may be required, increased power consumption and overhead that can affect performance, i.e. what AI applications customers can’t afford.
The bill also allows the Secretary of Commerce to be awarded to the Secretary of Commerce in a way that “secretary determines appropriate ownership and location” of export chips. This creates a real-time surveillance system that allows the US government to track all advanced semiconductors around the world, raising questions about data sovereignty and privacy.
Commercial surveillance meets national security
The AI Chip Surveillance Proposal represents an unprecedented fusion of national security orders and commercial technology products. Unlike traditional export controls that simply limit destinations, this approach creates a continuous surveillance obligation that blurs the line between private commercial transactions and state surveillance.
Representative Foster’s background as a physicist lends technical credibility to the initiative, but emphasizes how scientific expertise can participate in geopolitical competition. The law reflects the belief that technical solutions can solve political problems. Embedding surveillance capabilities into semiconductors can prevent misuse.
However, the proposed law raises fundamental questions about the nature of technology exports in a globalized world. Should all advanced semiconductors become potential surveillance devices?
How will essential AI chip surveillance affect innovation in countries that rely on US technology? What precedents are set in other countries that are trying to monitor technology exports?
Accelerating technology separation
Essential AI chip monitoring requirements can inadvertently accelerate the development of alternative semiconductor ecosystems. If US chips have built-in tracking mechanisms, countries may step up their efforts to develop domestic alternatives or sources from suppliers without such requirements.
China has already invested heavily in semiconductor self-sufficiency following years of US restrictions, and could view these surveillance requirements as further justifications for technology separation. The irony is impressive. Efforts to track the Chinese use of US chips could ultimately reduce their appeal and market share in the global market.
Meanwhile, allies may question whether they need critical infrastructure that relies on chips that the US government can monitor. The broad language of this law suggests that AI chip surveillance applies not only to enemies but to all foreign countries that potentially strain relationships with their technological sovereignty-focused partners.
The future of semiconductor governance
Congress appears to be reluctant to wait as the Trump administration continues to develop alternatives to Biden’s AI spreading rules. The CHIP Security Act represents a more proactive approach than traditional export controls, moving from restrictions to aggressive surveillance in a way that can restructure the global semiconductor industry.
This evolution reflects a deeper change in how states view technology exports in an age of great power competition. Once managed primarily by market forces and technical standards, the semiconductor industry is increasingly operating under geopolitical mandate that prioritizes control of commerciality.
Whether AI chip surveillance becomes law depends on Congress’ actions and industry responses. However, bipartisan support suggests that some form of semiconductor surveillance may be inevitable, marking a new chapter in technology, commercial and national security relations.
Conclusion: The end of anonymous American semiconductor?
The issue facing the industry is not whether the US controls technology exports, but how extensive it will monitor after it leaves the US coast. In this new paradigm, every chip becomes a potential intelligence asset, and every chip exports data points in the global monitoring network.
The semiconductor industry is currently facing important choices. It is adapted when products are equipped with their own tracking systems or risk being excluded from the US market.
As Congress pushes mandatory AI chip surveillance, they may witness and report accordingly the end of anonymous semiconductors and the beginning of an era in which all processors know exactly where it belongs.
See: US-CHINA TECH WAR escalates with new AI chip export controls
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