Generative artificial intelligence is a technology critical to the future economic and national security of the United States. The U.S. must strive for global leadership in this fast-developing field. Critical to the development of GAI are semiconductors and related software designed and developed by Nvidia. Nvidia’s market share approaches 100%.

The Biden administration knows the importance of Nvidia and its GAI technologies. In September 2022, the Biden administration imposed export controls on Nvidia’s most advanced semiconductors. Under the export controls, Nvidia is proscribed from selling its most advanced semiconductors to China . Beijing, too, understands the importance of GAI for its own national security and for the economic potential of GAI. China is unhappy about the export controls.

The Chinese Communist Party is doing everything it can to obtain Nvidia’s most advanced semiconductors and related technologies. Chinese companies involved in GAI are also trying to work around the export controls.

Smugglers of Nvidia chips hide the semiconductors among shipments of live lobsters , for example. Smuggling rings have been created to obtain Nvidia's most advanced GAI technologies.

This situation is incompatible with effective U.S. national security. There are several steps the administration should take to enhance its export controls.

First, it must require a digital ID for batches of the most advanced semiconductors. Second, the U.S. must require documentation throughout the entire supply chain. Know the end user. Third, Washington should require sellers of Nvidia GAI technologies to know their customers. Fourth, the U.S. should conduct random checks of the Nvidia supply chain. Fifth, it should tighten restrictions on Nvidia’s cloud computing operations in China. It is not in the interest of the U.S. that Nvidia expands its cloud computing business in China. And sixth, Washington should increase the budget and powers of the U.S. Bureau of Industry and Security, the agency responsible for the export controls. A few million dollars in additional funding is essential to the national security of the U.S.

James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes   a daily note   on finance and the economy, politics, sociology, and criminal justice.