Senior US lawmakers have called for an immediate suspension of export licences allowing Nvidia to ship advanced artificial intelligence chips overseas, following revelations of a major smuggling operation routing sensitive technology to China. The developments, first reported by the Financial Times, have intensified scrutiny over how effectively Washington is enforcing its export controls on cutting-edge semiconductor technology.
In a letter addressed to US Commerce Secretary Howard Lutnick, Republican Senator Jim Banks and Democratic Senator Elizabeth Warren urged “immediate action” to halt what they described as a “large-scale diversion” of advanced American AI chips to China through intermediaries in south-east Asia. The lawmakers specifically called for licences covering exports to countries such as Malaysia, Thailand, Vietnam, and Singapore to be paused or reconsidered.
The appeal follows the indictment of Wally Liaw, a co-founder of Supermicro, who has been accused of conspiring to bypass US export restrictions by funnelling large quantities of Nvidia chips to China via third countries. The case has raised alarm in Washington over the vulnerability of global supply chains and the potential misuse of US-developed AI technology.
Banks and Warren also criticised statements made by Nvidia chief executive Jensen Huang, who had previously dismissed concerns about chip diversion while lobbying against tighter export restrictions. According to the senators, Huang had assured officials that customers were aware of legal constraints and carefully monitored compliance. Lawmakers now argue those assurances may have been misleading, pointing to existing reports at the time that suggested otherwise.
Nvidia responded by reaffirming that compliance with US export laws remains a top priority, stating that it continues to work closely with both customers and government authorities. The company also argued that illicit diversion is ultimately ineffective, as it does not provide support or services for systems operating outside regulatory frameworks.
The US Commerce Department declined to comment directly on the lawmakers’ request but referenced earlier statements suggesting that controlled sales of certain advanced chips to China could still benefit the American technology ecosystem. The debate highlights the delicate balance between maintaining technological leadership and safeguarding national security.
The issue comes amid broader efforts by the US government to tighten control over critical technologies. The Federal Communications Commission, led by chairman Brendan Carr, recently announced plans to stop certifying foreign-made WiFi routers, a move widely seen as targeting potential security risks linked to overseas manufacturing, particularly in China.
Meanwhile, legislative momentum is building on Capitol Hill. The House Foreign Affairs Committee is preparing to consider the proposed Chip Security Act, which would introduce stricter tracking requirements for advanced AI hardware to prevent diversion. Experts argue that existing enforcement mechanisms are outdated, with technology security specialist Ryan Fedasiuk noting that current systems fall short of modern logistics standards.
The controversy also intersects with policy decisions made under Donald Trump, whose administration had recently approved limited licences for Nvidia to sell its H200 chips to China following industry lobbying. That decision is now under renewed scrutiny as lawmakers question whether corporate assurances were sufficient to justify easing restrictions.
As concerns mount over the potential leakage of sensitive AI capabilities to geopolitical rivals, the unfolding scandal underscores the growing complexity of regulating global technology flows. With bipartisan pressure intensifying, the Biden administration faces a critical test in determining whether current export controls are robust enough to protect US national security interests in an era of rapid technological competition.
