Senator Tom Cotton of Arkansas and Representative Bill Huizenga of Michigan sent a letter to Secretary of Commerce Howard Lutnick on March 20, raising concerns about large-scale smuggling of advanced artificial intelligence chips. The lawmakers, who are lead sponsors of the Chip Security Act, called for immediate implementation of anti-diversion measures to prevent advanced technology from being illegally exported to China.
The issue is significant as recent investigations have revealed multiple attempts to bypass U.S. export controls on high-end chips. These efforts threaten national security and could undermine current policies aimed at maintaining America’s technological advantage.
In their letter, Cotton and Huizenga cited several incidents involving illegal shipments of Nvidia chips. In one case known as “Operation Gatekeeper,” authorities disrupted a ring that used straw purchasers and removed manufacturer labels before shipping the chips to China. Another case involved routing Nvidia chips through Malaysia and Thailand before reaching China, with the ringleader arrested just before taking a major technology position. Singapore officials also raided over 20 locations suspected of diversion activity last year, charging individuals with falsifying paperwork for shipments destined for China. Megaspeed, a Singapore-based company linked to a Chinese government-owned cloud firm, imported more than $4.6 billion in Nvidia hardware and is under investigation for possible violations.
A U.S. official reported that DeepSeek’s latest model was trained using Nvidia Blackwell chips likely clustered in a Chinese data center. Under Secretary Jeffrey Kessler said, “we catch significant smuggling and illicit exports, but we’re concerned it’s just the tip of the iceberg.” Assistant Secretary David Peters testified that chip smuggling remains among their top enforcement priorities.
Most recently, an indictment unsealed by the Department of Justice charged Super Micro Computer employees with smuggling billions in Nvidia chips to China using shell companies and elaborate concealment methods such as building dummy servers and removing identifying labels.
Cotton and Huizenga wrote: “Export enforcement is a notoriously challenging problem, and the various concealment methods demonstrated in past cases show the need for more modern, creative solutions. Our Chip Security Act would require location verification to be implemented for export-controlled advanced chips. While no tool is foolproof, new anti-diversion methods would enable American companies to sell their products with greater peace of mind and open new markets.”
Cotton has experience assisting Arkansans with federal agencies according to his official website. He served as an Infantry Officer in the United States Army according to his official website, chaired the Senate Select Committee on Intelligence according to his official website, attended Dardanelle High School and earned degrees from Harvard University and Harvard Law School according to his official website, grew up on a family cattle farm in Yell County according to his official website, served on both the Senate Armed Services Committee and Senate Committee on Energy and Natural Resources according to his official website, and currently serves as chairman of the Senate Republican Conference according to his official website.
The lawmakers concluded by urging Secretary Lutnick to begin implementing technical anti-diversion solutions outlined in their bill while legislative efforts continue.
