Rounds Introduces Legislation to Prevent Smuggling of American AI Chips into China

WASHINGTON – U.S. Senators Mike Rounds (R-S.D.) and Mark Warner (D-Va.) today introduced legislation to prevent the smuggling of American-made artificial intelligence (AI) chips into China. The Stop Stealing our Chips Act would amend the Export Control Reform Act to create a whistleblower incentive program at the Bureau of Industry and Security (BIS). The program is designed to increase reporting of illegal exports.

“The United States has taken extensive measures to prevent American-made AI chips from falling into the wrong hands, particularly China,” said Rounds. “Unfortunately, China continues to utilize back-door methods to smuggle these chips into their country, creating a grave national security concern. Our legislation would strengthen BIS’s export control enforcement by rewarding whistleblowers with credible information on illegal actions to come forward. We must do a better job protecting Americans and preventing the flow of illegal chips into China.”

“U.S. export control laws serve a crucial purpose in protecting our national security, restricting our adversaries’ access to cutting-edge U.S. goods and technology,” said Warner. “Unfortunately, too often, violations of these laws go unreported and undetected. This legislation would create an incentive for whistleblowers to report the bad actors that are breaking these laws, allowing BIS to better prevent the diversion of export-controlled goods and safeguard our national security.”

BACKGROUND:

The smuggling of cutting-edge AI chips from the United States into China is a growing national security concern, as China intends to use advanced AI systems created with these chips for military applications and advanced surveillance systems. Reporting has indicated that at least eight Chinese smuggling networks have conducted transactions exceeding $100 million each. Reports also indicate that these chips often reach sanctioned Chinese entities, including military research institutions and companies linked to the People’s Liberation Army. The United States has taken measures to restrict China’s access to these materials, but despite these measures, black-market networks and intermediaries have exploited loopholes to funnel restricted chips into China.

Specifically, Rounds’ legislation would:

• Require BIS to create a public, secure platform for submitting whistleblower reports.
• Establish a fund, financed by fines collected from export control violations, to cover whistleblower rewards and program operations.
• Includes confidentiality guarantees and anti-retaliation safeguards to protect whistleblowers.

Whistleblowers providing original information leading to fines against violators can receive 10 to 30 percent of collected fines, with exceptions for known terrorists and criminals as well as federal employees acting within the scope of their duties. Reports deemed credible must lead to formal investigations within 60 days, with whistleblowers receiving status updates every 30 days. Any remaining funds from fines will be returned to the Treasury. No new funds are appropriated for this program. This program is modeled after the Securities and Exchange Commission’s Whistleblower Incentive Program.

Click HERE to read full bill text.

###