Biden administration proposes new rules to tighten grip on AI chip flows

The outgoing administration of United States President Joe Biden is proposing a new framework for the export of advanced computer chips used to develop artificial intelligence, an attempt to balance national security concerns about the technology with the economic interests of producers and other countries.

But the framework proposed Monday also raised concerns of chip industry executives who said the rules would limit access to existing chips used for video games and restrict in 120 countries the chips used for data centres and AI products. Mexico, Portugal, Israel and Switzerland are among the nations that could have limited access.

Commerce Secretary Gina Raimondo said on a call with reporters previewing the framework that it’s “critical” to preserve America’s leadership in AI and the development of AI-related computer chips. Fast-evolving AI technology enables computers to produce novels, make scientific research breakthroughs, automate driving and foster a range of other transformations that could reshape economies and warfare.

“As AI becomes more powerful, the risks to our national security become even more intense,” Raimondo said. The framework “is designed to safeguard the most advanced AI technology and ensure that it stays out of the hands of our foreign adversaries but also enabling the broad diffusion and sharing of the benefits with partner countries.”

White House National Security Adviser Jake Sullivan stressed that the framework would ensure that the most cutting-edge aspects of AI would be developed within the US and with its closest allies instead of possibly being offshored like the battery and renewable energy sectors.

A tech industry group, the Information Technology Industry Council, warned Raimondo in a letter last week that a hastily implemented new rule from the Democratic administration could fragment global supply chains and put US companies at a disadvantage. Another group, the Semiconductor Industry Association (SIA), said Monday that it was disappointed the policy was being “rushed out the door” before a presidential transition. President-elect Donald Trump is to take office on January 20.

“The new rule risks causing unintended and lasting damage to America’s economy and global competitiveness in semiconductors and AI by ceding strategic markets to our competitors,” SIA President and CEO John Neuffer said.

One industry executive who is familiar with the framework and insisted on anonymity to discuss it said the proposed restrictions would limit access to chips already used for video games despite claims made otherwise by the government. The executive said it would also limit which companies could build data centres abroad.

‘Control technology worldwide’

Because the framework includes a 120-day comment period, Trump’s incoming Republican administration could ultimately determine the rules for foreign sales of advanced computer chips. This sets up a scenario in which Trump will have to balance US economic interests with the need to keep the country and its allies safe.

Government officials said they felt the need to act quickly in hopes of preserving what is perceived to be a six- to 18-month US advantage on AI over rivals such as China, a head start that could easily erode if competitors are able to stockpile the chips and make further gains.

Ned Finkle, vice president of external affairs at the chipmaker Nvidia, said in a statement that the prior Trump administration had helped create the foundation for AI’s development and the proposed framework would hurt innovation without achieving the stated national security goals.

“While cloaked in the guise of an ‘anti-China’ measure, these rules would do nothing to enhance US security,” he said. “The new rules would control technology worldwide, including technology that is already widely available in mainstream gaming PCs and consumer hardware.”

Under the framework, roughly 20 key allies and partners would face no restrictions on accessing chips, but other countries would face caps on the chips they could import, according to a fact sheet provided by the White House.

The allies without restrictions include Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, South Korea, Spain, Sweden, Taiwan and the United Kingdom.

Users outside of these close allies could buy up to 50,000 graphics-processing units per country. There would also be government-to-government deals that could bump up the cap to 100,000 if their renewable energy and technological security goals are aligned with the US.

Institutions in certain countries could also apply for a legal status that would let them buy up to 320,000 advanced graphics-processing units over two years. Still, there would be limits as to how much AI computational capacity could be placed abroad by companies and other institutions.

Also, computer chip orders equivalent to 1,700 advanced graphics-processing units would not need a licence to import or count against the national chip cap. The exception for the 1,700 graphics-processing units would likely help meet the orders for universities and medical institutions as opposed to data centres.

The new rules are not expected to hinder the AI-driven data centre expansion plans of leading cloud computing providers such as Amazon, Google and Microsoft because of exemptions for trusted companies seeking large clusters of advanced AI chips.

China’s Ministry of Commerce said in response to the proposed rules that China will take necessary measures to safeguard its “legitimate rights and interests”.

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