AI OVERWATCH Act

This bill requires the Under Secretary of Commerce for Industry and Security to require a license for the export, reexport, or in-country transfer of certain advanced integrated circuits to countries of concern, and establishes related prohibitions, certifications, and a strategy for U.S. leadership in artificial intelligence.

Sec. 2, License requirement for exports of covered integrated circuits to countries of concern: The bill amends the Export Control Reform Act to add a new section 1758A. It defines key terms including "covered integrated circuit" (advanced chips with specific performance thresholds, excluding those not designed for data centers and non-GPU microprocessors), "restricted integrated circuit" (higher-performance chips), "country of concern" (China, Cuba, Iran, North Korea, Russia, and other designated countries), and "trusted United States person." The Under Secretary must require a license for exporting covered or restricted integrated circuits to entities in or headquartered in a country of concern, and cannot issue a general license for this purpose. Before approving a license for a covered integrated circuit, the Under Secretary must certify to Congress that the export has verifiable mechanisms to prevent support for military or intelligence capabilities of a country of concern, will not harm the U.S. defense industrial base or technology leadership, and includes a technical assessment. Any existing licenses for such exports are terminated. Until 14 days after submitting an American Artificial Intelligence Victory Strategy to Congress, all license applications for covered integrated circuits to countries of concern must be denied within one business day. The Victory Strategy must detail a framework to win the AI race, implications of China winning, effects of access to chips, policy recommendations, and assessments of China's chip production. Licenses for restricted integrated circuits to countries of concern must be denied entirely. Trusted U.S. persons may be exempt from certain license requirements for covered integrated circuits not destined for Macau, Hong Kong, or Country Group D:5, provided the chips remain under their ownership and control. The Under Secretary must establish standards for designating trusted U.S. persons, including security measures, limits on transferring processing power abroad, ownership restrictions, and annual audits.