Congress Weighs Putting China Chip Curbs in the Defense Bill

The fight over which computer chips may leave the United States is moving into an unlikely venue: the annual bill that funds the military. According to Politico, Congress is weighing whether to fold advanced-chip export restrictions into the National Defense Authorization Act, the must-pass measure that lawmakers aim to clear by the end of the year.

The momentum is new, and much of it traces back to a scandal. Allegations that Nvidia chief executive Jensen Huang had ties to a suspected Chinese intelligence agent have rattled Washington and given China hawks fresh ammunition. We reported on the board probe into those claims last week, alongside news that Nvidia's China-bound H200 chips have been piling up in Hong Kong.

Three bills, one vehicle

The Senate's version of the defense bill reportedly carries three measures aimed at Chinese access to AI chips. The Chip Security Act would require location tracking for advanced processors sold abroad. The AI Overwatch Act and the MATCH Act would add further layers of review. Taken together, Yahoo Finance reports, the Senate bill would let Congress scrutinize AI chip export licenses, require chipmakers to track hardware once it leaves the country, and press allied governments to limit sales of chipmaking equipment to China.

Support is not confined to one party. House Speaker Mike Johnson and House Democratic Leader Hakeem Jeffries have both signaled openness to attaching semiconductor provisions to the NDAA, and Senator Elizabeth Warren has said she wants one of the measures passed this year.

Far from a done deal

It would be a mistake to treat any of this as settled. Reporting from early last week suggested the opposite, that the GAIN AI Act, the AI Overwatch Act and the Chip Security Act had been left out of the final compromise over the bill, with the possibility of returning in a later session. The White House has at times resisted the toughest export language, splitting from Republican China hawks on the issue. So the honest read is that the provisions have momentum and a deadline, but no guarantee of survival.

Whatever Congress does, today's rules still stand. The current framework allows case-by-case licensing of H200-class chips bound for China under specific conditions. Nvidia, for its part, is reported to be the leading opponent of the first two measures, a reminder that the company with the most to lose also has the most to say about how this plays out.