Nvidia's H20 chips have suddenly been investigated by the Cyberspace Administration of China. The mandatory location monitoring provision in the US "CHIPS and Science Act" has backfired.

On July 31, 2025, China's Cyberspace Administration issued a public statement, demanding that NVIDIA provide detailed documents regarding the suspected vulnerabilities and embedded tracking technology in the H20 chip. The regulatory agency pointed out that the AI chips provided by NVIDIA may have "serious vulnerabilities and backdoors," including "tracking and positioning" and "remote shutdown" functions.

The statement of the Cyberspace Administration cited reports from American AI experts who had previously emphasized that such monitoring technology has been embedded in NVIDIA's chip architecture.

In 2025, the United States imposed stricter export bans on China, and NVIDIA was caught up in the intense economic and technological competition between China and the United States. In early July, NVIDIA announced that it had obtained an export license from the US government to re - enter the Chinese market with the H20. Although this move might be part of the compromise in the China - US trade negotiations, China's concerns about the United States still linger.

This concern is not unfounded. In May 2025, the United States proposed a bill - the Chip Security Act. If the bill is passed, companies like NVIDIA will be required to add tracking and location verification mechanisms to their AI chips for export. On July 17, the Select Committee on the Chinese Communist Party (SCCCP) of the US House of Representatives emphasized the importance of this bill again.

I. The Doubts Are Not Groundless: Has the Tracking Technology "Lurked" in the Chips?

On May 15, 2025, a group of eight bipartisan representatives from the House of Representatives proposed the Chip Security Act, which requires companies like NVIDIA to embed a location verification mechanism in their processors before export. This represents the most aggressive approach taken by the United States in its technological competition with China so far, far beyond restricting the destination of the chips, but actively monitoring their final whereabouts.

It is reported that when discussing the feasibility of the Chip Security Act, NVIDIA claimed that it could not continue to track its chips after they were sold. NVIDIA is trying to strike a balance between the ever - changing US chip policies and China's growing distrust, highlighting the complex geopolitical environment surrounding AI hardware. The H20 chip is designed to comply with the early US export controls and is at the core of NVIDIA's strategy to retain its business in China without violating US export controls.

However, Bill Foster, a Democratic Congressman from Illinois who was once a particle physicist and is one of the co - sponsors of the Chip Security Act, said that the technology to track chips after they are sold already exists, and most of this technology is already built into NVIDIA's chips. Moreover, since competitors like Google have already used such location tracking technology in their data center AI chips as a security measure, it is hard to believe that NVIDIA cannot do so.

Congressman Foster has successfully designed a variety of computer chips in his scientific career. His background as a physicist adds technical credibility to the Chip Security Act and also highlights how scientific expertise is applied to geopolitical competition. This legislation reflects the belief that technical solutions can solve political problems - embedding monitoring functions in chips can prevent their misuse.

II. The Core of the Bill: How Do Chips Turn into "Monitors"?

According to the proposed Chip Security Act, all "covered integrated circuit products" - including products with Export Control Classification Numbers (ECCN) 3A090 (high - performance computing chips), 3A001.z, 4A090 (computers containing high - performance chips), and 4A003.z - will be subject to mandatory AI chip monitoring. Companies like NVIDIA will be required to embed a location verification mechanism before their AI chips are exported, re - exported, or transferred domestically to foreign entities.

The technology for verifying the location of chips relies on the communication between the chip and a secure computer server, which will use the time it takes for the signal to reach the server to verify the chip's location. Experts from a Washington think tank said that this tracking technology will provide general location information of the chips at the national level, which is much more than what the Bureau of Industry and Security (BIS) of the US Department of Commerce, responsible for enforcing export controls, currently has.

The scope of this legislation goes far beyond simple location tracking. Companies will face continuous monitoring obligations and must report any reliable information regarding chip transfers, including location changes, unauthorized users, or tampering attempts.

The Chip Security Act also gives the US Secretary of Commerce broad enforcement powers to "verify in a manner the Secretary deems appropriate" the ownership and location of exported chips. The bill does not elaborate on how such a mechanism can operate without damaging the chip's performance or introducing new vulnerabilities. This creates a continuous monitoring system that extends far beyond the point of sale, fundamentally changing the relationship between manufacturers and their products. Moreover, the US government may be able to track every advanced semiconductor globally, which will raise global concerns about data sovereignty and privacy regarding the US move.

It is also worth noting that Congressman Foster's second legislative goal is to prevent AI chips from starting up without proper US export control licenses. This is technically more complex than location verification, but he said it is time to start discussing both efforts.

III. Bipartisan Consensus: Is the Monitoring Bill Inevitable?

Perhaps the most remarkable aspect of this AI chip monitoring initiative is its bipartisan cooperation. The bill has received wide - spread bipartisan support. The consensus among the two parties on AI chip monitoring reflects that the so - called "China challenge" has deeply penetrated into US political thought, transcending traditional partisan differences.

Whether the AI chip monitoring bill can become law depends on the actions of Congress and the response of the industry. However, the Senate has passed a similar bill submitted by Senator Tom Cotton, indicating that chip monitoring has received wide - spread support from Congress. The coordination between the two houses suggests that regardless of which party controls Congress, some form of chip monitoring may be inevitable, which will open a new chapter in the relationship between technology, business, and national security.

Conclusion: The Era of Chip Monitoring Has Arrived, and the Control of the Track under the Technological Iron Curtain

The Chip Security Act represents a more radical approach than traditional export controls. Shifting from restrictions to active monitoring, it may reshape the global semiconductor industry.

The question regarding chips is no longer whether the United States will control technology exports, but rather how extensively the United States will monitor them after they leave the country. In this emerging model, each chip becomes a potential intelligence asset, and each export becomes a data point in the global monitoring network. This also confirms the intention in the newly released US Artificial Intelligence Action Plan: The United States not only wants to win the AI competition but also tries to unilaterally control the entire track.

Ironically, the effort to track China's use of US chips may ultimately reduce the attractiveness and market share of US chips in the global market. Not only China, but also US allies may not want their critical infrastructure to rely on chips that can be monitored by the US government. Countries may increase their efforts to develop domestic alternatives.

This article is from the WeChat official account "Internet Law Review", author: Internet Law Review. Republished by 36Kr with permission.