There’s a loophole enabling Chinese firms to get around export controls on U.S. AI chips. The firms can rent the microchips from the cloud that floats above us.
Hence the know-your-customer legislation being proposed by Congressman John Moolenaar, chairman of the Select Committee on the Chinese Communist Party, and Congressman Josh Gottheimer (Select Committee, June 26, 2026).
Moolenaar: “In the AI race, China will buy what it can and steal the rest, which is why it is actively trying to get backdoor access to U.S. data centers and train its AI models via cloud computing. U.S. cloud platforms have a role to play in stopping China’s AI buildup, which fuels its military and surveillance ambitions. This bipartisan commonsense legislation will require them to protect their products and American national security by simply verifying the identity of their users.”
Gottheimer: “This bill gives American companies the legal clarity they need to do the right thing and report when bad actors are trying to use our own cloud infrastructure to threaten our national security.”
The Select Committee’s press release about the bill notes that U.S. export controls “already prohibit our adversaries from buying advanced AI chips, but these restrictions stop short of reining in adversaries from using the cloud to access them. Cloud computing permits customers to rent chips through providers like Amazon Web Services, Microsoft Azure, or Google Cloud. By renting advanced AI chips, as opposed to purchasing them outright, the CCP can access powerful, state-of-the-art semiconductor technology to train its AI models.”
Will this loophole closure get enacted? Related legislation, the Chip Security Act to prevent smuggling of advanced microchips, introduced in May 2025, is still languishing in committee. Making sure that U.S. export controls on top tech achieve their purpose doesn’t seem to be a very high congressional priority.
