Three US Bills Could Tighten China’s Access to AI Chips
Key Facts
Three bills that could tighten scrutiny of China’s access to advanced chips and the equipment used to make them are moving through Washington, though no new restrictions are in force yet. Reuters reported that the proposals are under consideration for possible inclusion in the fiscal 2027 defense authorization bill. The move comes amid growing debate over chip security and relations with China, while Nvidia has drawn political and media attention following reports about its CEO, Jensen Huang. In Monday’s November 9 session, the company’s shares fell 4.3%, according to the Associated Press, after its board announced an investigation into whether Huang was the target of a foreign intelligence effort. The developments point to two parallel tracks: scrutiny of the espionage allegations and a legislative debate over semiconductor export controls.
The proposed package includes the AI Overwatch Act, which gives Congress authority over exports of advanced chips, and the Chip Security Act, which requires companies to track their chips to combat smuggling. The Match Act would press US allies to impose additional restrictions on chipmaking equipment bound for China, Reuters reported. The proposals target different points in the supply chain: export decisions, product tracking and access to manufacturing equipment. The House Foreign Affairs Committee advanced all three bills earlier in the year. They are now part of the Senate’s process for handling the National Defense Authorization Act, where their possible inclusion in the annual legislation is under consideration.
The proposals’ political path remains uncertain. Reuters reported that the White House sent congressional staff comments in late October on export-control measures under consideration for inclusion in the defense bill. The Information reported that the comments called for restricting some types of technology covered by the Match Act, while the White House did not comment on the measures, according to Reuters. A spokesperson for Americans for Responsible Innovation said, "The hurdle these bills have to clear is getting White House support." Reuters added that Commerce Department leadership has not completed efforts to draft new rules in the past and could pull back from the effort again. The proposals therefore remain vulnerable to revision or stalling before they become binding rules.
Nvidia opposes the Chip Security and AI Overwatch Acts, according to a former congressional official who dealt with the company and was quoted by Reuters. Senators Elizabeth Warren and Jim Banks called for passage of the AI Overwatch Act as part of the National Defense Authorization Act, saying it would cut off China’s routes to advanced chips. They said Huang’s confirmation that he had a relationship with a person suspected of working for Chinese intelligence made national security concerns more urgent. In contrast, a Chinese Foreign Ministry spokesperson said the espionage allegations were a smear campaign against Beijing, according to the Associated Press. These positions add a political dimension to the legislative debate, but they do not mean the investigation has established intelligence activity or that Congress has passed the proposed restrictions.
Nvidia’s board announced the investigation after Huang acknowledged an intimate relationship with a Chinese businesswoman, according to the Associated Press. Dan Ives said the investigation could heighten regulatory scrutiny in Washington over China and chip restrictions, and could remain a near-term burden on the stock. After falling in Monday’s session, the shares closed at $178.67, according to EL7 data. The company said on August 26 that it was not assuming any revenue from data center computing in China in its forecast for the third quarter of its fiscal 2027. In the same fiscal year’s second quarter, it reported revenue of $96.2 billion, up 106% year over year, including $89.0 billion from data centers, up 117%.
The proposals come against the backdrop of existing export restrictions and tensions over chip supplies to China. In an earlier disclosure on its fiscal 2026 first-quarter results, Nvidia said the US government notified it on April 9, 2025, that a license would be required to export H20 chips to the Chinese market. The company said it recorded a $4.5 billion charge related to H20 inventory and purchase obligations after the product had generated $4.6 billion in sales before the licensing requirements, and that it could not ship an additional $2.5 billion in revenue that quarter. The US Commerce Department has also said chip and manufacturing-equipment controls are based on national security concerns, including military uses. On November 5, Reuters reported that about 600,000 of Nvidia’s advanced chips were being held in Hong Kong pending shipment to mainland China, while Beijing had not approved large-volume imports.
In its report on those supplies, Reuters said major Chinese internet companies had each obtained about 10,000 H200 chips in previous months, despite Beijing’s lack of approval for large-scale imports to the mainland. By the end of October, a Chinese server containing 8 H200 chips was being offered for more than 6 million yuan, or about $900,000, nearly 3 times its price a year earlier. The news agency also reported that ByteDance, Alibaba and Tencent ordered more than 3 million RTX Pro 5500 cards in October, a less powerful product that complies with export controls, at a stated total value exceeding $35 billion. These developments show continued Chinese demand for Nvidia products at varying levels and prices, while the US debate focuses on tightening scrutiny of advanced chips and the routes by which they reach China. The next step will depend on the proposals’ path through the Senate package and the White House’s position; it has not commented on them so far.