U.S. Tightens Its Grip on AI Chip Exports Worldwide

The U.S. government recently announced new restrictions on the export of artificial intelligence (AI) chips and technology. This measure is intended to maintain the dominant position of the United States and its allies in the field of advanced computing while preventing China from gaining access to these technologies.

The new regulations will limit the number of AI chips that can be exported to most countries, but will allow unrestricted access to U.S. AI technology for key allies. At the same time, exports to countries like China, Russia, Iran, and North Korea will remain fully blocked.

In the final days of outgoing President Joe Biden's administration, these comprehensive regulations were unveiled, aiming to strengthen U.S. influence in AI across the globe. As U.S. Commerce Secretary Gina Raimondo stated, "The U.S. leads AI now—both AI development and AI chip design, and it’s critical that we keep it that way."

This initiative represents four years of effort by the Biden administration to limit China's access to advanced chips, which could enhance its military capabilities. The U.S. is working to close loopholes and establish new controls to secure its leadership in AI.

While it is uncertain how the incoming Trump administration will choose to enforce these new rules, both administrations share similar concerns regarding China's competitive threat. The new regulations are set to take effect 120 days after their announcement, providing time for the new administration to assess them.

Under the new rules, restrictions will be placed on advanced graphics processing units (GPUs), which are essential for data centers that train AI models. Major manufacturers of these chips include Nvidia, headquartered in Santa Clara, California, and Advanced Micro Devices (AMD). Following the announcement, shares for Nvidia and AMD fell between 2% and 3% in premarket trading.

Key cloud service providers like Microsoft, Google, and Amazon will be able to apply for global authorizations to establish data centers. This significant component of the new rules will exempt their projects from the export quotas on AI chips. However, shares of these companies also dipped by around 1% in premarket trading.

To receive approval, companies must meet strict conditions such as security protocols, reporting requirements, and commitments to uphold human rights.

Previously, the Biden administration already imposed substantial restrictions on China's access to advanced chips and related production technology, updating the controls annually to tighten the screws on potential technology diversion.

The anticipation surrounding these rules has drawn criticism from influential industry leaders even before their publication. Nvidia labeled the regulation as a "sweeping overreach," asserting that the White House is overregulating technologies already available in mainstream gaming and consumer devices. Additionally, Oracle voiced concerns earlier this month, arguing that the regulations could hand over a large share of the global AI and GPU market to Chinese competitors.

The new regulations introduce worldwide licensing requirements for specific chips while also controlling access to "model weights" of advanced AI models. These model weights play a crucial role in machine learning decision-making processes and are often considered the most valuable elements of AI technology.

The regulations categorize countries into three tiers. Approximately 18 nations—including Japan, the United Kingdom, South Korea, and the Netherlands—will be exempt from these rules. In contrast, around 120 other countries, such as Singapore, Israel, Saudi Arabia, and the UAE, will face certain export limits. Countries under arms embargoes, including Russia, China, and Iran, will be completely barred from receiving the technology.

Moreover, U.S.-based companies that obtain global authorizations, including Microsoft and Amazon Web Services (AWS), will be restricted to deploying only 50% of their total AI computing power outside the United States. Of this, no more than 25% can be used in Tier 1 countries, and only up to 7% in any single non-Tier 1 country.

AI presents opportunities to improve access to healthcare, education, and food supply, but it can also be misused for developing biological and conventional weapons, facilitating cyberattacks, and enabling surveillance activities that violate human rights.

As U.S. National Security Adviser Jake Sullivan remarked, "The U.S. must prepare for rapid advances in AI capabilities, which could have a transformative impact on the economy and our national security".

AI, chips, exports