Bipartisan Senators Seek Tighter Rules On AI Chip Production For Chinese Firms

A bipartisan group of U.S. senators has urged President Donald Trump’s administration to strengthen export control measures governing advanced artificial intelligence chip production. The lawmakers argue that existing rules may still allow Chinese companies to gain access to cutting-edge computing capabilities through overseas subsidiaries and indirect manufacturing arrangements.

The request follows recent action by the Trump administration to close a potential loophole involving the export of advanced chips, including those produced by Nvidia. Officials moved to address concerns that Chinese companies operating through subsidiaries outside China could obtain access to restricted technology.

Concerns Over Existing Export Controls

Last year, the Trump administration announced that it would not enforce global chip access regulations introduced by the previous Biden administration. That decision raised concerns among policymakers and industry experts about possible gaps in the export control framework.

In response, the Bureau of Industry and Security (BIS), the division of the U.S. Commerce Department responsible for enforcing export control laws, clarified that sales involving Chinese company subsidiaries located in third countries, including Malaysia, require an export licence.

However, questions remain about whether the updated guidance is sufficient to prevent Chinese firms from obtaining advanced computing technology through alternative channels.

Focus On Contract Chip Manufacturers

Experts have highlighted another potential weakness involving chip contract manufacturers. According to former State Department official Chris McGuire, the latest BIS guidance does not fully address scenarios in which front companies linked to Chinese firms could place orders for customised chips through major semiconductor foundries.

Such arrangements could allow advanced chips to be produced without directly violating restrictions aimed at limiting China’s access to high-performance computing technology.

The issue has drawn attention because leading contract manufacturers play a central role in global semiconductor production. Lawmakers fear that gaps in oversight could reduce the effectiveness of broader export control policies.

Senators Call For Additional Action

On Monday, Republican Senator Jim Banks of Indiana and Democratic Senator Andy Kim of New Jersey sent a letter to BIS chief Jeffrey Kessler requesting that the agency directly address the possibility of Chinese company subsidiaries ordering customised chips through contract manufacturers.

The senators argued that failing to close the gap would weaken broader efforts to restrict China’s access to advanced computing power.

In their letter, they warned that any unresolved loophole could significantly undermine existing restrictions. They further stated that export controls offer little protection to U.S. national security or industrial competitiveness if advanced chip production can still be accessed through fabrication orders placed at leading semiconductor foundries.

Meanwhile, both the BIS and Taiwan Semiconductor Manufacturing Co. had not immediately responded to requests for comment on the senators’ concerns.

With inputs from Reuters