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U.S. Moves to Embed Location Verification in AI Chips as Nvidia Rejects Backdoor Mandates

Officials are drafting requirements for on-chip verification with mandatory diversion reporting to stem an estimated $1 billion in annual GPU smuggling to China.

BEIJING, CHINA - AUGUST 01: In this photo illustration, an Nvidia chip is seen through a magnifying glass on August 1, 2025 in Beijing, China. (Photo by VCG/VCG via Getty Images)
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Michael Kratsios during the Bloomberg Tech conference in San Francisco, California, US, on Thursday, June 5, 2025.

Overview

  • Lawmakers introduced the Chip Security Act in May to mandate that export-controlled AI processors embed location-verification mechanisms within six months of enactment.
  • The White House Office of Science and Technology Policy is exploring software or hardware approaches to enable chip-level location tracking, according to senior official Michael Kratsios.
  • Nvidia’s chief security officer, David Reber, published a blog post denying any built-in kill switches or backdoors in its GPUs and warning that such features would create exploitable vulnerabilities.
  • Chinese regulators summoned Nvidia representatives to Beijing this month to probe alleged security risks in the H20 chips and to question U.S. proposals for on-chip tracking.
  • An estimated $1 billion worth of high-end Nvidia GPUs has been smuggled into China despite strict export controls, highlighting persistent enforcement challenges.