China's AI Chip Smuggling Threat Alarms US Lawmakers in Security Hearing

John Moolenaar, Chairman of the Select Committee, during a Congressional hearing said "China's smuggling of advanced AI chips is a pervasive threat," pointing to multiple cases disrupted over the past year. He cited a recent Justice Department case worth $2.5 billion, calling it "the largest export control violation in US history."

Lawmakers said alleged smugglers used elaborate methods to evade detection. These included removing serial numbers from equipment and creating fake server shipments to disguise the movement of restricted chips to China. Wally Liu was named among those linked to such efforts.

The urgency stems from AI's strategic importance. "AI is truly transformative," Moolenaar said, adding it is already reshaping warfare, governance and industry.

Witnesses told the committee that China remains heavily dependent on Western technology across the AI supply chain. Despite large state investments, Chinese chipmakers are still unable to produce cutting-edge chips at scale and rely on foreign manufacturing tools and advanced semiconductors.

Dmitri Alperovitch, a cybersecurity expert and former chief technology officer of CrowdStrike, said the competition hinges on computing power. "The binding constraint in this competition is not talent, it is not data and it is not cash... it all comes down to compute," he said.

He warned that China is willing to go to great lengths to close the gap, including smuggling chips and building overseas data centres to bypass export controls. "We are in a race, and the stakes could not be higher," he said.

Yusuf Mahmood described a broader campaign of technology theft. "The CCP seeks full AI domination by 2030... so it steals," he said, citing risks ranging from trade secret theft to cyber-enabled "distillation attacks" that replicate American AI systems.

Mahmood warned that current safeguards are inadequate. "We are not prepared to secure our AI systems," he said, adding that stolen AI could already be aiding adversaries on the battlefield.

Kyle Chan said U.S. firms still lead in advanced AI models but cautioned that China is investing heavily in building a full-stack ecosystem. "Export controls are not a panacea... they have bought us some time," he said.

AAndre Carson argued that domestic policy choices could weaken America's competitive edge. "The easiest way for China to win is if we shoot ourselves in the foot," he said, pointing to immigration restrictions and funding cuts.

The hearing underscored that AI competition is increasingly shaping global geopolitics. U.S. officials view maintaining technological leadership as critical not only for economic dominance but also for military and strategic advantage.

The debate comes amid intensifying U.S.-China rivalry over advanced technologies, including semiconductors, quantum computing and artificial intelligence. Washington has imposed sweeping export controls in recent years to limit Beijing's access to cutting-edge chips, while China has accelerated efforts to build a self-reliant semiconductor ecosystem.

Analysts say the outcome of this contest will have far-reaching implications for global power balances, supply chains and the future of digital governance.

- IANS