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Congress Races to Close AI Chip Smuggling Loopholes Before China Exploits Them

Congress is moving quickly to strengthen export controls on advanced AI chips, with the House Foreign Affairs Committee advancing several bills designed to prevent smuggling and coordinate restrictions with allied nations. The committee is set to mark up a package of foreign policy legislation that could reshape how the U.S. controls the flow of cutting-edge semiconductor technology to China and other adversaries, addressing what lawmakers describe as critical gaps in current enforcement.

What Bills Are Congress Considering to Tighten Chip Controls?

The House Foreign Affairs Committee has been holding a series of markups throughout 2026 focused specifically on export controls and AI hardware. In April, the committee advanced measures to strengthen enforcement at the Bureau of Industry and Security, including legislation to increase the number of export control officers stationed internationally and to raise civil penalties for violations. The committee has also advanced two key pieces of legislation with direct implications for AI chip flows.

  • The MATCH Act: This legislation aims at coordinating export controls on AI hardware with allied nations to prevent circumvention through third-party routes and allied countries.
  • The Chip Security Act: This bill specifically targets the illicit smuggling of advanced AI chips to foreign adversaries and has attracted significant lobbying attention from chipmakers and national security advocates.
  • The Export Controls Enforcement Act (H.R. 4505): This measure focuses on strengthening the enforcement mechanisms for existing export restrictions on AI hardware.

The Chip Security Act has emerged as a focal point for industry attention. Advanced Micro Devices has disclosed lobbying on the measure totaling more than $2 million in recent quarters, while TSMC Arizona Corp. and other semiconductor equipment makers have also registered their positions on the legislation.

Why Are Chipmakers and Defense Contractors Lobbying on These Bills?

The stakes for the semiconductor industry are substantial. Companies like KLA Corp. have disclosed more than $1 million in lobbying over the past year specifically on "trade policy regarding China, including tariffs and export controls on semiconductor manufacturing equipment for advanced models," according to lobbying disclosures. ASML US LLC similarly flagged export control policies affecting chip production across multiple quarters.

The debate reflects a fundamental tension in U.S. policy. Critics of existing controls have argued they disadvantage American companies without meaningfully slowing adversaries, while proponents contend that enforcement gaps have allowed advanced chips to reach restricted destinations through third-party routes. The bills moving through Congress attempt to address this gap by targeting smuggling networks and creating multilateral coordination mechanisms.

On the defense side, companies like Shield AI Inc. have spent $1.4 million lobbying on related national security issues, including foreign military sales and artificial intelligence policy. The interconnection between AI chip controls and military financing reflects how tightly these issues have become linked in congressional deliberations.

How Can the U.S. Prevent Chips From Reaching Restricted Destinations?

The legislation under consideration takes multiple approaches to closing enforcement gaps and preventing circumvention. The strategies reflect different views on how to balance national security with economic competitiveness.

  • Increased International Presence: Legislation to station more export control officers internationally would expand the U.S. government's ability to monitor and intercept shipments before they reach restricted destinations.
  • Stronger Penalties: Raising civil penalties for export control violations aims to increase the cost of smuggling and deter companies from participating in illicit chip transfers.
  • Multilateral Coordination: The MATCH Act seeks to align export controls across allied nations, preventing smugglers from routing chips through countries with weaker restrictions.
  • Direct Smuggling Enforcement: The Chip Security Act specifically targets the networks and individuals involved in illicit chip transfers, treating smuggling as a distinct enforcement priority.

The multilateral approach reflects lessons learned from previous attempts to control technology flows. When one country tightens restrictions unilaterally, smugglers often route products through allied nations with less stringent enforcement. By coordinating with partners, the U.S. aims to eliminate these workarounds.

The committee markup is scheduled for May 13 at 2:00 p.m. at the Rayburn House Office Building and will bring together members with widely divergent views on U.S. foreign policy and trade. The committee is chaired by Brian Mast (R-FL), with Gregory Meeks (D-NY) serving as Ranking Member.

The timing of these legislative efforts reflects broader concerns within Congress about the pace of technological competition with China. Lawmakers are racing to tighten controls before adversaries exploit remaining gaps in existing law, even as they grapple with the economic implications for American semiconductor companies that depend on global markets. The bills moving through the Foreign Affairs Committee represent an attempt to thread that needle, strengthening enforcement while maintaining the competitiveness of U.S. chipmakers in allied markets.