Rounds Legislation to Prevent Smuggling of American Semiconductors into China Unanimously Passes Senate

WASHINGTON - U.S. Senator Mike Rounds (R-S.D.) today announced that his legislation to prevent the smuggling of American-made semiconductors into China has passed the Senate. The Stop Stealing our Chips Act would amend the Export Control Reform Act to create a whistleblower incentive program at the Bureau of Industry and Security (BIS). The program is designed to increase reporting of illegal exports.

"I am pleased that the Stop Stealing our Chips Act has passed the Senate," said Rounds. "The United States has taken extensive measures to prevent American-made semiconductors from falling into the wrong hands, particularly China; however, China continues to smuggle these chips into their country. As the use of artificial intelligence continues to accelerate, this creates a grave national security concern. Our legislation would strengthen BIS's export control enforcement by rewarding whistleblowers with credible information on illegal actions to come forward. I look forward to working with our colleagues in the House to get this important legislation through Congress and to President Trump's desk to be signed into law."

Senator Mark Warner (D-Va.) is a cosponsor of this legislation.

"Today's Senate passage of the Stop Stealing our Chips Act is an important step toward strengthening our export control system and protecting America's national security," said Warner. "As China continues working to acquire advanced American AI technology through illicit networks, we need stronger tools to detect and prevent these violations. This bipartisan legislation empowers whistleblowers to help expose illegal export schemes and gives BIS additional support in enforcing our export control laws. I'm proud to work with Senator Rounds to help safeguard America's technological edge and keep sensitive technologies out of the wrong hands."

BACKGROUND:

The smuggling of cutting-edge semiconductors from the United States into China is a growing national security concern, as China intends to use advanced AI systems created with these chips for military applications and advanced surveillance systems. Reporting has indicated that at least eight Chinese smuggling networks have conducted transactions exceeding $100 million each. Reports also indicate that these chips often reach sanctioned Chinese entities, including military research institutions and companies linked to the People's Liberation Army. The United States has taken measures to restrict China's access to these materials, but despite these measures, black-market networks and intermediaries have exploited loopholes to funnel restricted chips into China.

Rounds first introduced the Stop Stealing our Chips Act in April 2025. Specifically, Rounds' legislation would:

• Require BIS to create a public, secure platform for submitting whistleblower reports.
• Establish a fund, financed by fines collected from export control violations, to cover whistleblower rewards and program operations.
• Includes confidentiality guarantees and anti-retaliation safeguards to protect whistleblowers.

Whistleblowers providing original information leading to fines against violators can receive 10 to 30 percent of collected fines, with exceptions for known terrorists and criminals as well as federal employees acting within the scope of their duties. Reports deemed credible must lead to formal investigations within 60 days, with whistleblowers receiving status updates every 30 days. Any remaining funds from fines will be returned to the Treasury. No new funds are appropriated for this program. This program is modeled after the Securities and Exchange Commission's Whistleblower Incentive Program.

Click HERE to read full bill text.

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