Nvidia (NVDA, Financial) is under the microscope as U.S. Representative Bill Foster gears up to introduce a bill cracking down on Nvidia AI chip smuggling into China.
Foster, a former particle physicist, says the technology to track chips post-saleâand even disable them if they end up somewhere they shouldn'tâis already baked into many of Nvidia's own GPUs. His proposal would give the Commerce Department six months to draft rules requiring AI accelerators to âphone homeâ to a secure server, using signalâtiming to confirm they're operating only in licensed locations.
Whispers of smuggling aren't just theoretical. Reports suggest Chinese entities may have around 50,000 H100 GPUsâfar beyond what U.S. export rules allowâpotentially fueling DeepSeek's AI ambitions on the cheap. Foster warns this isn't a future threat but a current reality, pointing to a Singapore fraud case where prosecutors charged three nationals over server scams that might involve Nvidia chips. That global scope has made cracking down feel urgent.
Independent experts agree the tracking tech works: Alphabet's (GOOG, Financial) Google already monitors its AI chip fleet across data centers for security. Nvidia, however, has said it can't oversee its products once they leave the factory, leaving a gap Foster's bill aims to fill. If passed, the law would also mandate firmware that locks chips outside approved countries or users.
Investors should care because any new export curbs could crimp Nvidia's brisk international salesâexportâdriven revenue makes up roughly 15% of its top line. As Congress readies debate, all eyes will be on whether Nvidia pushes back with its own solutions or risks getting caught in the crossfire of a techâsecurity showdown. When the bill lands on the floor, it could mark one of the year's biggest tests of how governments regulate runaway AI demand.
