Representative John Moolenaar (R-MI), chairman of the House Select Committee on the Chinese Communist Party, is urging the Commerce Department to impose substantially tighter export controls on advanced AI chips destined for China, arguing that current semiconductor export policy is too porous.

At the core of Moolenaar's proposal is a mechanism known as the "rolling technical threshold" (RTT). Instead of establishing a fixed ceiling on the types of chips China may receive, the RTT would automatically recalibrate the limit based on the domestic production capabilities of Chinese manufacturers. The stated objective is to ensure that China's total AI computing capacity never exceeds 10% of total US AI compute capacity. The proposal builds on a framework first introduced under the Biden administration in October 2022, when the Commerce Department established categorical performance thresholds — based on interconnect speed and computing throughput — to restrict specific chip models from reaching China. Those rules were further tightened in October 2023 to close loopholes that had allowed stripped-down variants, such as Nvidia's H800 and A800, to continue flowing to Chinese buyers.

Legislative Details

By linking the threshold directly to China's own manufacturing progress, the RTT framework is designed to create a constantly shifting target rather than a static line that Chinese chipmakers could eventually surpass through domestic advancement. China's foundry capabilities remain a focal point of the debate: SMIC, the country's leading contract chipmaker, has produced 7-nanometer chips for Huawei's Mate 60 Pro smartphone, but industry analysts note its output remains constrained by limited access to advanced EUV lithography equipment due to separate Dutch and Japanese export restrictions.

In the Senate, Senators Jim Banks (R-IN) and Pete Ricketts (R-NE) are reinforcing the effort. Ricketts has introduced the bipartisan SAFE Chips Act, which would freeze existing limits on advanced chip exports to China and prevent future administrations from relaxing them through executive action alone.

Separately, Banks and Senator Andy Kim (D-NJ) have called for heightened oversight of contract chip manufacturers, specifically naming TSMC. These firms produce chips on behalf of American designers but operate fabrication facilities outside US borders. The lawmakers' concern is that a chip designed in California, manufactured in Taiwan, and distributed through a subsidiary in a third country could technically bypass US export restrictions even when the ultimate purchaser is a sanctioned Chinese entity. The Commerce Department already exercises some extraterritorial reach through the foreign direct product rule, which subjects foreign-made items to US licensing if they incorporate American technology, software, or tools — the same legal mechanism used to cut off Huawei from global chip suppliers in 2020. Extending this authority more aggressively to cover contract foundries would significantly broaden its application.

The SAFE Chips Act carries particular weight because it would codify executive-branch policy into federal statute. As a result, a future administration could not unilaterally reverse the restrictions in the manner it could override a Commerce Department rule or licensing decision.

Trump-Era Approvals Under Scrutiny

The legislative push comes partly in response to actions taken by the Trump administration, which authorized limited sales of Nvidia and AMD chips — including the H200 and MI308 models — to Chinese purchasers under specific conditions.

Those conditions required US chipmakers to collect a 15% revenue share from Chinese sales and imposed volume caps intended to prevent large-scale transfers of computing power. Lawmakers advocating for stricter controls argue these guardrails remain insufficient.

Moolenaar and his allies contend that conditional approvals with revenue-sharing requirements still permit strategically significant chips to reach Chinese firms, including entities with documented ties to the People's Liberation Army. Advanced AI chips are dual-use technologies: the same hardware used to train commercial language models can also accelerate military targeting systems, autonomous weapons development, and signals intelligence processing.

Implications for Nvidia, AMD, and the Semiconductor Industry

Should Congress move to extend export control jurisdiction more aggressively to overseas contract manufacturers, the resulting compliance burden on non-US fabrication plants could fundamentally alter how American chip designers structure their foundry partnerships and select manufacturing locations. Nvidia, which designs nearly all its chips through TSMC, has reported that China accounted for roughly 13% of its data center revenue in fiscal year 2024, down from approximately 20–25% before the October 2022 restrictions took effect.

The bipartisan backing of the SAFE Chips Act is notable in its own right. By converting the existing congressional consensus on restricting China's access to advanced semiconductors from executive policy into binding law, any future attempt to reverse course would carry significant political costs regardless of which party occupies the White House.