On Thursday, the Banking, Housing, and Urban Affairs Committee of the United States Senate held a hearing titled “Promoting National Security Through Export Controls, Investment Security, and the Defense Production Act.” Lawmakers urged for more actions to prevent advanced semiconductor chips from being illegally sold to China through non-official channels.
During the hearing, Senator John Kennedy, a Republican from Louisiana, questioned witnesses including Thea Kendler, Assistant Secretary for Export Administration at the Department of Commerce, regarding the issue of export controls on semiconductor chips to China.
Senator Kennedy referred to a recent investigation by The Wall Street Journal which revealed that over 70 distributors were selling advanced semiconductor chips produced by Nvidia to entities in China in order to circumvent U.S. export controls, raising concerns.
At the hearing, Senator Kennedy stated, “If you do a quick internet search, you’ll find that not just seven, but 70 distributors are selling Nvidia’s controlled chips to China. In fact, some distributors are selling entire servers to China, each priced at around $300,000, containing 8 chips. Is this true?”
Senator Kennedy also cited data from a research report released by the Center for a New American Security (CNAS) in Washington, stating that the median number of AI chips sold to China is 12,500, questioning its accuracy.
In response, Assistant Secretary Kendler stated, “Any actions that violate our control measures will be dealt with by the export enforcement division, and we are closely monitoring the situation.”
Kendler emphasized during her testimony that the Department of Commerce remains focused on addressing the challenges posed by the Chinese Communist Party’s military modernization and human rights violations.
She mentioned that the CCP aims to surpass the U.S. and its allies and partners by dominating certain advanced technology areas such as artificial intelligence, autonomous systems, advanced computing, semiconductors, quantum information science, biotechnology, aerospace systems, as well as advanced materials and manufacturing technology, to develop its military.
“To achieve this goal, China is sparing no effort to acquire key advanced technologies with military potential,” Kendler added.
She also touched on the issue of civil-military fusion in China, saying, “The general operation of export controls aims to allow civilian technology use while controlling military applications, but the CCP’s Civil-Military Fusion strategy intentionally blurs the boundaries between the commercial sector and China’s defense industrial base… This is even more concerning, and thus, the U.S. needs to strengthen export controls.”
Since October 23 of last year, the Bureau of Industry and Security (BIS) within the U.S. Department of Commerce has implemented export control measures on advanced semiconductor chips, including those produced by Nvidia, to prevent their sale to China, aiming to prevent China from leveraging these advanced technologies to arm its military.