Three Measures to Restrict Chip Exports to China Advance in US Defense Bill
Key Facts
Momentum is building in the US Congress to include new restrictions on advanced chip exports to China in the fiscal 2027 defense authorization bill, with three oversight measures proposed in a Senate amendment package. House Speaker Mike Johnson said a consensus was taking shape to limit exports, while lawmakers discussed including tighter controls in the annual defense legislation. The proposed measures cover reviews of sales licenses, chip tracking and checks to ensure chips are not diverted to unauthorized destinations. The moves come amid rising security concerns over China’s access to artificial intelligence technologies. Senators Elizabeth Warren and Jim Banks said the case surrounding Huang adds urgency to those concerns and called for the AI Overwatch Act to be passed as part of the defense bill.
The Senate version gives Congress authority to review licenses for sales of advanced AI chips to China and allows the Commerce Department to track chips to prevent their diversion to unauthorized regions. The legislative effort also includes aligning allies’ restrictions with US restrictions, while another amendment version included requirements to verify that chips were not diverted to countries of concern and a ban on exporting some powerful chip types. Roll Call said versions of three oversight bills were included in a Senate amendment package, covering export licenses, tracking and bans. But the House-passed defense bill does not contain similar language, leaving the difference between the two chambers’ versions as a focus of the legislative process. A Reuters report said the three measures were candidates for inclusion in the fiscal 2027 defense authorization bill; it did not say their inclusion was final.
On congressional oversight, the House Foreign Affairs Committee requested a hearing on December 2 on chip smuggling and reported interference in export control policies and investigations. Senate Banking Committee Chairman Tim Scott called on Huang to appear before the committee at a hearing scheduled for December 3. Scott also requested testimony from Commerce Secretary Howard Lutnick at a hearing on December 10. Senators Warren and Chris Coons asked the administration to preserve documents related to NVIDIA exports to China, along with a congressional briefing on the national security risks raised by the suspected intelligence operation. Senators Ron Wyden and Cory Booker also requested the preservation of Commerce Department records concerning its Section 232 investigation and a review of export license applications and the department’s communications with the company and Huang.
The political escalation coincided with a sudden change in NVIDIA’s leadership, as the company said Jensen Huang had immediately resigned as chairman, chief executive and a board member. Chief Financial Officer Colette Kress agreed to take over as interim chief executive. NVIDIA confirmed that its board had begun a search for a permanent chief executive and appointed Harvey Jones as the company’s first board chairman. Company disclosures did not substantiate the espionage allegations or the details of the relationship reported by media outlets, so those allegations remained attributed to the reports that carried them. Reuters said allegations linked to Huang involved chip shipments to China worth at least $7.5 billion, claims the report did not definitively prove.
The developments also affected trading: NVIDIA shares fell more than 4% at Thursday’s close, November 12, after posting a larger decline earlier in the session, according to the Associated Press. In the next session, the company’s shares closed at $162.85 on November 13, according to EL7 data. No reliable open verification was available for the AMD and TSM closing prices cited in the circulating version of the story. In its fiscal 2027 second-quarter financial disclosure, NVIDIA said licensed H200 shipments it had made were less than 1% of data center revenue in the latest quarter. The company reported revenue of $96.2 billion for the quarter ended July 26, 2026, up 106% year over year.
NVIDIA said it assumes no revenue from data center computing in China in its fiscal 2027 third-quarter outlook and estimated total revenue at $108 billion, plus or minus 2%. The company is scheduled to report third-quarter results on November 17, at about 1:20 p.m. Pacific time, followed by an earnings call at 2 p.m. These dates put the company’s performance and outlook at the center of attention following the leadership change and legislative pressure. By contrast, the Information Technology Industry Council, whose members include NVIDIA, opposed the chip restriction measures, saying they could harm US competitiveness and complicate export control policy. The December hearings and the process of reconciling the two chambers’ versions remain the next milestones in determining whether the proposals become effective restrictions.