AI Sovereignty Act Mandates Sweeping Report on Tech Offshoring, Targeting China and IP Acquisition

The newly proposed AI Sovereignty Act isn't about regulating the AI you use every day, but rather about mapping out where the U.S. is losing its edge in developing the next generation of critical AI tech. Essentially, this bill tasks the Secretary of Commerce with becoming a super-sleuth, digging up every detail about how U.S. AI research and development (R&D) is being moved offshore and how foreign entities are acquiring domestic AI assets. Within 240 days of enactment, the Secretary must deliver a comprehensive report to Congress detailing these activities, along with a strategy to halt the trend and boost U.S. capabilities.

The Great AI Inventory: Tracking the Brain Drain

Think of this as an industrial audit for national security. The bill requires the Commerce Department to identify every location where U.S. companies are offshoring critical AI R&D and track any partnerships involved. This isn't just about factory floors; it covers complex areas like high-performance semiconductors, neural processing units, and the software frameworks used for advanced math and defense. The definition of “critical AI technologies” is broad, giving the government significant latitude to investigate hardware, software, and even data models, which could potentially sweep up many international collaborations under scrutiny.

Crucially, the report must track two highly sensitive areas. First, it needs to identify intellectual property (IP) and domestic AI assets acquired by foreign entities, especially through distressed sales or bankruptcy. Second, it requires tracking the movement of people: foreign nationals who studied or worked in U.S. AI and then went to work for foreign competitors, and even American officials who now work for foreign entities. While the public report is explicitly barred from including personally identifiable information (PII) on these individuals, the fact that the government is tracking this migration is a clear signal to U.S. companies and academics: international movement in the AI sector is now a matter of national security concern. For U.S. tech workers with international ties, this could mean increased scrutiny on their professional mobility and partnerships.

Geopolitics and the 30-Year View

This isn't a short-term fix; it’s a long-game strategy. The Commerce Department is mandated to look at trends spanning the next 30 years, analyzing global investment, workforce migration, and the geopolitical risks associated with AI offshoring. The report must specifically assess the implications for U.S. adversaries like China, Russia, Iran, and North Korea, as well as vulnerable markets like Taiwan. This focus means that future policy recommendations will likely be heavily weighted toward countering these specific nations, potentially impacting U.S. companies that have legitimate business dealings in those regions.

After compiling all this data, the Secretary must recommend concrete strategies to discourage offshoring, strengthen domestic R&D, and increase government oversight of foreign acquisitions. These strategies will be reviewed and updated annually, ensuring a continuous focus on maintaining U.S. AI superiority. For the average American, this bill is a procedural step, but one that sets the stage for future regulations—regulations that could either lead to a massive domestic investment boom in AI or create new compliance hurdles for companies that rely on global supply chains and talent.