Senators, law‑enforcement officials warn of gaps in export controls for AI chips; call for more resources and corporate tracking

Senators pressed federal trade and law‑enforcement officials at a hearing about whether U.S. export controls are failing to keep advanced semiconductors and other sensitive technology out of the hands of adversaries, particularly China and Russia.

"The sheer volume of legitimate trade far outweighs the illicit trade that's going on," an assistant director for global trade said, but added that "that small slice is of concern." He said the interagency effort including the "e 2 c 2" and the intelligence community is "laser focused" on protecting U.S. innovation and intellectual property.

Senator Mitt Romney framed the hearing with questions about whether large chips used in artificial intelligence are "getting through" export controls and suggested companies might be required to track where highly sensitive items are shipped. "If you're gonna see it, you know, ship something of high sensitivity to some nation that's not part of the coalition, then you have to track where it is and be able to report to us how much you've sent, to which company, and where those items have gone," he said.

An enforcement official described recent measures aimed at reducing diversion and strengthening supply‑chain defenses. He said agencies have issued more than a dozen multisector documents in the past 18 months to encourage industry hardening, and that enforcement tools have included adding firms to the Commerce Department's entity list. "Just this morning, you know, we added 4 companies to our entity list in China that were explicitly diverting AI chips to the Chinese military," he said.

On penalties, the official said violators face both criminal and administrative exposure. "They would be subject to criminal and or administrative enforcement authority," he said, citing criminal penalties that can reach "up to 20 years in jail or 1000000 dollars per fine" and administrative statutory maxima of $365,000 or twice the value of each violation. He pointed to a prior Seagate matter that produced a roughly $300,000,000 penalty as an example of enforcement intended to deter future violations.

A Department of Justice official said China is a primary focus. Referring to an international threat assessment, the official said China "seeks to become a world science and technology superpower" and pursues that goal through intellectual‑property theft, cyber operations and illicit procurement. The official urged greater resources for complex investigations, noting that "in one sanctions case alone ... there are multiple petabytes of data" that had to be analyzed and suggested resourcing be a consideration in the FY25 budget.

The DOJ official also told senators that the reauthorization of "Section 702" is "absolutely vital" to national security investigations and has in some instances yielded insights into illicit transfers; he offered to provide additional details in a classified setting.

Officials from enforcement and investigative agencies told senators they can and will aggressively enforce new authorities, but they reiterated that success depends on more analysts, more attaches overseas, better IT systems and close cooperation with industry and international partners.

The hearing produced no formal legislative votes. Senators and witnesses agreed on the need to balance industry burden with enforcement capability, but differed on where the policy line should be drawn. The session concluded with senators again urging concrete proposals on corporate reporting, resourcing and legal authorities to limit diversion of sensitive chips.