Nvidia slams U.S. plan for AI chip tracking: “No kill switches, no spyware”

The US government wants to put location trackers in advanced artificial intelligence (AI) chips to stop smuggling to China, but Nvidia says the plan creates dangerous security holes.

Michael Kratsios, the White House tech policy director, said officials are looking at “software or physical changes” to track where chips end up. He spoke to Bloomberg Television on August 5 during meetings in South Korea.

“There is discussion about potentially the types of software or physical changes you could make to the chips themselves to do better location-tracking,” Kratsios said. “That is something we explicitly included in the [AI Action] plan.”

The proposal targets companies like Nvidia and AMD. Neither company has been asked about the tracking idea yet, Kratsios admitted.

Nvidia quickly pushed back against the concept. The company published a blog post titled “No Backdoors. No Kill Switches. No Spyware” just days after Kratsios’s comments became public.

“Hardwiring a kill switch into a chip is something entirely different: a permanent flaw beyond user control, and an open invitation for disaster,” wrote David Reber Jr., Nvidia’s security chief. “It’s like buying a car where the dealership keeps a remote control for the parking brake.”

The tracking push comes as chip smuggling grows. About $1 billion worth of banned Nvidia chips have reached China’s black market despite US export rules.

China’s government summoned Nvidia last week over security concerns about the company’s H20 chips. Officials demanded proof that the chips don’t contain backdoors that could let US agencies spy on users.

The Justice Department charged two Chinese nationals Tuesday with smuggling AI chips worth tens of millions of dollars. They allegedly moved the chips through companies in Singapore and Malaysia.

Congress is considering the Chip Security Act, which would require location verification in exported AI chips. Companies would have to report if tracking gets disabled or chips show up in banned countries.

Rep. Bill Huizenga, who sponsors the bill, said it wouldn’t create “spyware” or “kill switches.” He said chip location data would stay with companies, not the government.

Some experts worry tracking could backfire. If buyers don’t trust US chips, they might look elsewhere.

“The fact of having location tracking means there’s sort of a level of surveillance that many potential purchasers would be uncomfortable with,” said John Villasenor, a UCLA engineering professor.

Jacob Feldgoise from Georgetown’s Center for Security and Emerging Technology said tracking might push China to build its own chips faster.

“That increases the incentives to really invest locally,” he said.

The tracking debate happens as Trump officials consider lifting some restrictions on Nvidia’s H20 chip sales to China. The move would be part of a trade deal involving rare-earth magnets.

Nvidia argues that deliberately weakening critical infrastructure should never be a policy tool. The company says governments have other methods to combat smuggling, including criminal prosecutions like the recent arrests in California.

The proposal reflects the growing tech battle between the US and China over AI control. Both countries see advanced chips as critical for military and economic power.