Warren Invokes Power Under Statute to Require the Trump Administration to Turn Over Information on its Failure to Enforce Export Controls for AI Chips to China, Exposing[...]

Warren Invokes Power Under Statute to Require the Trump Administration to Turn Over Information on its Failure to Enforce Export Controls for AI Chips to China, Exposing National Security Risks

"I am deeply concerned that your mismanagement of U.S. export control regulation will create more opportunities for companies like Huawei to once again divert millions of advanced AI chips to China."

"BIS has had every opportunity to fix this loophole and has yet to act-even as outside experts have raised this exact issue."

Text of Letter (PDF)

Washington, D.C. - Today, U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Jeffrey Kessler, Under Secretary for Industry and Security at the Department of Commerce, invoking the Export Control Reform Act of 2018 (ECRA) to require the production of documents and information surrounding loopholes in U.S. export controls on advanced semiconductors that were created by the Department of Commerce's Bureau of Industry and Security (BIS) attempted rescission of the Biden Administration's AI Diffusion Rule. The Ranking Member specifically cites Kessler's failure to confirm that the BIS is enforcing the worldwide licensing requirement meant to stop potential diversion of advanced AI chips to American adversaries.

"One specific loophole-related to the Foundry Due Diligence Rule ('FDD Rule')-remains open today, and recent reporting suggests that it 'may be allowing an unknown number of high-end semiconductors to reach Beijing,'" wrote Ranking Member Warren.

BIS implemented the [FDD] Rule in January 2025 to address a breach in U.S. export controls that failed to prevent Huawei, a Chinese multinational technology company, from successfully using an intermediary shell entity to order potentially millions of advanced chips from Taiwan Semiconductor Manufacturing Company (TSMC), a chip manufacturer or "foundry." The FDD Rule requires foundries like TSMC to presume that any advanced chips they export require export licenses, unless certain due diligence obligations are met. These procedures provide key oversight because they make it much more difficult for entities like Huawei to divert controlled AI chips from TSMC.

To remain effective, [the FDD Rule] relied on the AI Diffusion Rule's imposition of worldwide license requirements on certain chips, requiring companies to seek approval from BIS before exporting certain advanced AI chips. The FDD Rule works only if the underlying license requirements are actively enforced. When the Trump Administration announced its rescission and non-enforcement of the AI Diffusion Rule-promising a "future" replacement that, more than a year later, still has not been issued-it inadvertently stripped the FDD Rule of the very license requirement that made it effective.

"Without that license requirement, foundries like TSMC may once again fabricate and export advanced chips for unvetted intermediaries in third countries. In essence, your actions created a foundry loophole that brings the United States back to the very circumstances that allowed Huawei to divert millions of AI chips in the first place," wrote the Ranking Member. "BIS has had every opportunity to fix this loophole and has yet to act-even as outside experts have raised this exact issue."

Under ECRA, the Department is required to provide "[a]ny information obtained at any time" under any provision of the Export Administration Regulations "upon the request of the chairman or ranking minority member of [the] committee or subcommittee [of appropriate jurisdiction]. As the Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, and to inform the Committee's oversight of ECRA's implementation, Senator Warren requested that BIS make this information available no later than August 6, 2026.

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