Countering AI Chip Smuggling Has Become a National Security Priority: An Updated Playbook for Preventing AI Chip Smuggling to the PRC

The Center for a New American Security (CNAS), in collaboration with the Institute for AI Policy and Strategy, has released a new working paper, Countering AI Chip Smuggling Has Become a National Security Priority: An Updated Playbook for Preventing AI Chip Smuggling to the PRC, by Erich Grunewald and Tim Fist.

This new report catalogues evidence that substantial quantities of advanced artificial intelligence (AI) chips are being smuggled into China, undermining U.S. national security. China has a long history of smuggling U.S. technology despite export restrictions, and AI chip smuggling is strongly incentivized by the superior performance, higher supply, and more mature software ecosystem of American AI chips compared to chips legally available to Chinese AI labs.

To solve this problem, the authors outline measures to collect better data and incentivize reports throughout the supply chain, including a whistleblower incentive program, notification requirements, and software-based location verification. They also recommend approving the White House’s requested budget of $313 million for the Bureau of Industry and Security (BIS) for fiscal year 2026.