First in Punchbowl News: An influential tech nonprofit is pushing three congressional committees to hold hearings on “large-scale smuggling” into China of advanced computer chips that power artificial intelligence, especially those from Nvidia.
The group, Americans for Responsible Innovation, which has pushed for more restrictions around Nvidia’s exports, said the panels should also look at whether the company did enough to stop smuggling.
“A public hearing would help clarify the facts, identify regulatory gaps, and signal that national security cannot be compromised for short-term commercial gain,” the nonprofit said in its letter, dated Thursday.
Questions about the scale and response to potential smuggling of Nvidia’s cutting-edge chips have prompted big swings on policy in the last year, and are crucial to bills that lawmakers could soon take up.
ARI urged hearings at the panels overseeing the Commerce Department’s export controls program — the Senate Banking Committee and the House Foreign Affairs Committee — plus the House China Committee.
Chips and flips. As with other policy issues around Nvidia, the viewpoints on smuggling are diverse. Nvidia CEO Jensen Huang has insisted “diversion” of state-of-the-art chips essentially doesn’t happen, in part because his company’s two-ton assemblies are just too massive to sneak away.
A July investigation by the Financial Times estimated the smuggled chips are worth $1 billion. On Tuesday, the Justice Department also announced it had charged two Chinese nationals with smuggling “tens of millions of dollars’ worth of sensitive microchips.”
Nvidia spokesperson Sarah Weinstein said in a statement that the DOJ’s “case demonstrates that smuggling is a nonstarter.”
“Even relatively small exporters and shipments are subject to thorough review and scrutiny, and any diverted products would have no service, support, or updates,” Weinstein said.
China hawks worry Beijing is poised to beat the United States in the AI race by stealing shipments of advanced chips, or by hiding the fact that Chinese firms are the ultimate buyers. President Joe Biden’s administration had sought to control Nvidia sales to other countries in response to this concern.
President Donald Trump, whom Huang has courted, has leaned toward the view that America’s victory means strengthening U.S. chip-makers that want to sell worldwide.
The Trump administration reversed the Biden-era effort and opened up sales to China of earlier-generation Nvidia chips.
Tariffs. Speaking of the White House and chips, Trump said Wednesday night that he’s ready to put 100% tariffs on semiconductors. The idea’s really been scaring tech lately, though Trump said there’d be no levy on firms that pledge to build their chips in the U.S.
