In the days leading up to his departure, the Biden administration is planning to implement the latest round of export controls on artificial intelligence (AI) chips from companies like Nvidia, in a last-ditch effort to prevent advanced technology from falling into the hands of China and Russia.
According to sources familiar with the matter who spoke to Bloomberg, the United States aims to restrict the sale of AI chips necessary for data center construction at both the national and corporate levels. The goal is to concentrate AI development in “friendly nations” and align global companies with American standards.
As a result of these actions, semiconductor restrictions will be expanded to most regions globally, aiming to control the spread of AI technology amidst soaring demand.
These regulations are expected to be announced as early as this Friday, according to the sources.
The Biden administration is expected to establish three different levels of chip trade restrictions. At the highest level, a few U.S. allies will essentially have unrestricted use of American chips, while adversaries like China and Russia will be effectively barred from importing semiconductors. The computing capabilities of most countries around the world will be limited.
The first level in the new rules includes the United States and 18 allied countries, which are expected to include the UK, Germany, France, the Netherlands, Australia, Japan, South Korea, and Taiwan among others.
Companies will be free to deploy computing capabilities within these first-level countries. Companies headquartered in these countries can also apply to the U.S. government for permission to ship chips to data centers in most other parts of the world. However, a quarter of their total computing capabilities must remain within first-level countries, with no single second-level country exceeding 7%. Companies must also comply with U.S. government security requirements.
According to sources, American companies headquartered in the U.S. must retain at least half of their computing capabilities within the country. The aim is to ensure the U.S. and its allies always have more powerful computing capabilities than most countries.
The majority of countries fall under the second level. The new rules set the upper limit for the computing capabilities of these countries.
The third level is the strictest, including the U.S.’s adversaries like China, Russia, and all countries subject to U.S. arms embargoes. Sources revealed that there are about twenty-something countries in this third level. Essentially, the shipment of AI chips to data centers in these countries will be prohibited.
Companies based in third-level countries must agree to comply with U.S. government security requirements and human rights standards to bypass restrictions and obtain import quotas.
Through screening these “verified end-users” (VEUs), the U.S. government hopes to create a trusted group of entities to develop and deploy AI in secure environments worldwide.
After this news surfaced, Nvidia fell more than 1% during Wednesday’s closing. Following significant increases in 2023 and 2024, Nvidia has risen by 4.3% this year as of Wednesday’s closing, becoming the world’s most valuable chip manufacturer.
Nvidia opposed the proposal in its statement, saying that this restriction on global export rules for most regions would be a significant policy shift that not only would not reduce the risks of abuse but could also threaten economic growth and America’s leadership position.
The latest action by the Biden administration builds upon years of restrictive measures that have limited the ability of companies like Nvidia and AMD to sell advanced processors in China and Russia.
The U.S. is also attempting to prevent adversary countries from obtaining American advanced technology through entities in the Middle East or Southeast Asia.
The White House National Security Council representative declined to comment on the reports, and the Bureau of Industry and Security, responsible for export controls, did not respond to Bloomberg’s request for comment.
Last week, the chair and vice-chair of the House Select Committee on the CCP wrote in a letter to Commerce Secretary Gina Raimondo that America’s capabilities in AI chips are coveted by both partners and adversaries, stating that the demand for American AI technology is an opportunity for businesses and countries to break free from Beijing.