AI OVERWATCH Act Imposes Strict New Export Controls on High-Power AI Chips to China, Russia, and Others

The new AI OVERWATCH Act is stepping in to slam the brakes on the export of advanced AI chips and computing equipment to a list of countries the U.S. government defines as “countries of concern”—which includes China, Russia, Iran, North Korea, Cuba, and Venezuela. Starting immediately, if you’re a U.S. tech company making or selling the highest-performance integrated circuits, you will need a special, individually approved license for every single export destined for an entity located in one of those countries. This isn't a minor tweak; the bill explicitly bans the use of general licenses, meaning no bulk approvals, and it also terminates any existing licenses for these transfers right out of the gate.

The Chips That Matter

The bill gets highly technical when defining exactly which chips are covered. We’re talking about the specialized, high-octane integrated circuits (ICs) and computers used for serious AI training and data center operations—the kind of hardware that powers advanced military, intelligence, or cyber capabilities. The definition hinges on specific performance metrics, like a total processing performance of 4,800 or more, or a combination of performance and density. Think of these as the engine blocks for the next generation of supercomputers. The law also includes anything “functionally equivalent” to these high-spec chips, which gives the Commerce Department a lot of room to adapt as technology rapidly evolves.

Congressional Review: Your Export License Needs a Permission Slip

For U.S. tech companies, getting a license just got a whole lot harder and slower. Before the Under Secretary of Commerce can approve any license to export these covered circuits to a country of concern, they have to send a detailed certification report to Congress first. This report must certify, with verifiable mechanisms, that the chips won't support the military or intelligence capabilities of the foreign country. Crucially, the Commerce Department also has to certify that the export won't hurt the U.S. advantage in total nationally-installed processing power capacity. After the report lands on Capitol Hill, there’s a mandatory 30-day waiting period. This means that every single sensitive export license has to clear both the Commerce Department and a month-long Congressional review, which could easily turn into a massive bottleneck for companies trying to plan their supply chains.

The ‘Trusted’ Exemption Lane

Recognizing that these chips are still necessary for legitimate commercial use elsewhere, the bill carves out an important exemption for “trusted United States persons.” If a U.S. company or subsidiary is exporting these chips to a country not on the concern list, they can bypass some existing license requirements, provided they meet strict new standards. To qualify as “trusted,” a company must demonstrate strong physical and cybersecurity standards, ensure that no more than 10% of its ownership is held by entities from a country of concern, and agree not to install the majority of its high-performance computing outside the U.S. Essentially, the government is creating a fast lane for U.S. companies that can prove they are secure, loyal, and committed to keeping their most powerful tech stateside. This exemption is a clear signal that the government wants to incentivize secure operations and support the U.S. semiconductor manufacturing revival.

Real-World Impact: Immediate Disruption and Long-Term Strategy

The most immediate impact will be felt by U.S. semiconductor and computing firms that rely on sales to entities in the listed countries. The termination of existing licenses means current contracts and supply lines are instantly severed, forcing U.S. companies to scramble to adjust their business models. For the U.S. government, this law forces a major strategic review. The Commerce Department, alongside other agencies, now has to produce a comprehensive national security strategy detailing exactly how access to these chips affects the military and intelligence capabilities of countries like China. This strategy will include an intelligence assessment of China’s own chip production capabilities, aiming to inform future policy decisions. While this bill aims to protect U.S. technological leadership and national security, companies should prepare for significant regulatory friction and delays due to the highly specific technical definitions and the new, mandatory 30-day Congressional oversight period for every single covered export.