The United States is the world leader in innovation. But America’s adversaries are seeking to both pirate and profit from this innate advantage. A new piece of legislation, the Chip Security Act, ensures that the U.S. will retain its cutting edge. The act deserves broad and bipartisan support.
Semiconductors are foundational to national security. They power everything from advanced defense systems to critical infrastructure to artificial intelligence and beyond. Advanced microelectronics are critical to missiles, stealth aircraft, and AI-driven defense. In short, semiconductors undergird the machines and systems that protect the American people, both in war and in peacetime.
They are also, of course, at the center of the modern economy. As the foundational “brains” of modern electronics, semiconductors are at the forefront of emerging technologies and are increasingly the backbone of industries and whole sectors of the economy, from manufacturing to healthcare and everything in between.
The U.S. has been a leader in the creation and development of semiconductor technology. But it can’t take its lead for granted.
“The United States is heavily dependent on other nations for both commercial and defense semiconductor needs,” warned a 2024 report by the National Academies of Science, Engineering, and Medicine. China today spends more on importing chips than on oil. Beijing clearly knows where the engines that will power the future lie — and it will do everything in its power to obtain them.
On March 19, the Department of Justice unsealed an indictment charging three individuals with “conspiring to divert high-performance computer servers assembled in the United States and integrating sophisticated U.S. artificial intelligence technology to China, in violation of U.S. export control laws. Yih-Shyan “Wally” Liaw, Ruei-Tsang “Steven” Chang, and Ting-Wei “Willy” Sun allegedly “conspired to sell billions of dollars’ worth of servers integrating sensitive, controlled graphic processing units to buyers in China” via a “systematic scheme.”
As John Eisenberg, the assistant attorney general for national security, observed, the chips were “the product of American ingenuity.” Yet individuals were allegedly willing to provide America’s foremost opponent with key technology. Notably, Liaw, a U.S. citizen, was also co-founder, board member, and senior vice president for a publicly traded U.S.-based manufacturer. The defendants allegedly took “extensive” measures to conceal their scheme, including staging dummy servers at a warehouse and using hair dryers to remove and affix labels as part of a bid to get around the Department of Commerce’s export laws.
In yet another case, on March 25, the DOJ announced that two Americans and a Chinese national had plotted to send 600 restricted Nvidia chips, worth $170 million, to the Chinese Communist Party. As the U.S. House select committee on China noted, the case is a “wake-up call.” China is “racing to dominate AI, and chip smuggling is one way that they’re trying to close the gap.”
To forestall this possibility, the bipartisan committee recommended passing the Chip Security Act, which “provides the tools to protect America’s AI dominance and keep critical technology out of our adversaries’ hands.” The House Foreign Affairs Committee just passed the bipartisan legislation, and the rest of Congress should follow suit.
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The Chip Security Act would require location verification for advanced AI chips, require chipmakers to report when sensitive tech is potentially diverted to restricted actors, and require the Department of Commerce to study additional methods that might stop chips from being stolen, misused, or winding up in the wrong hands. As Rep. John Moolenaar (R-MI), the chairman of the select committee on China, noted, “China recognizes the superiority of American AI innovation and will do whatever it must to catch up. That’s why the bipartisan Chip Security Act is urgently needed.”
America must do more to shore up and protect its supply chain for this critical technology. And Washington must do more to prevent its adversaries from stealing them. Congress can start by passing the Chip Security Act without delay.
