The Biden administration’s new proposal to block or cap sales of AI computer chips throughout most of the world has not, shall we say, brought a smile to the face of AI chipmakers, tech companies who use them, or the countries that didn’t make the list for unlimited purchases of the tech.
The rule—proposed by the administration on its last full Monday in office—would extend its ban on selling AI chips to certain foreign countries, including China and Russia, the New York Times reported, while 18 foreign countries would have no limits on how many of the advanced chips they can buy.
“All other nations—most of the world—will be subject to caps,” according to the Times. The rules are an attempt “to close regulatory loopholes and prevent Beijing from acquiring advanced chips,” Reuters reported.
Cue the backlash. Countries and companies made their displeasure known. Nvidia, the biggest AI chipmaker by far, had unsuccessfully lobbied against the rules along with tech companies including Microsoft and Oracle, according to the Times. It brings in more money from sales of its chips abroad than it does in the US, according to Reuters, and 17% of its revenue comes from China.
Nvidia’s VP of government affairs, Ned Finkle, released a seven-paragraph statement critical of the rule and said the company “look[s] forward to a return” to the Trump administration’s policies.
John Neuffer, president and CEO of the Semiconductor Industry Association, said in a statement that the rule hurts US semiconductor makers by “ceding strategic markets to our competitors.” China’s foreign ministry said the move had “the fundamental aim of depriving developing countries, including China, of their right to technological advancement and development,” the Washington Post reported. Other countries whosepurchases would be capped include Mexico, Poland, and Switzerland, the Times reported.
“The right balance.” National Security Advisor Jake Sullivan defended the administration’s policy in a White House press briefing Monday.
“It is a complicated question, because we’re trying to strike the right balance between ensuring that the frontier of AI stays in the United States of America and our close allies while also ensuring that the rest of the world can benefit from AI and get the hardware that they need to power AI applications going forward,” he said.
Timeline. If the Trump administration pushes the rule toward the finish line, the next deadline is the end of the proposal’s 120-day comment period. The industry isn’t waiting to find out what happens. Jason Oxman, president of the Information Technology Industry Council, wrote to Congressional leaders on Sunday, the New York Times reported, and “asked Congress to step in and use its authority to overturn the action if the Trump administration did not.”
This report was originally published by CFO Brew.
