The Biden administration is now preparing new restrictions to bar the export of AI chips, such as those made by Nvidia Corp. The move, which came just days before President Joe Biden leaves office, is part of a larger strategy to control who gets to develop and use cutting-edge AI.
According to a Bloomberg report, the plan purports to cut sales of AI chips used in data centers based on country and company. The effort aims to limit China and Russia’s access to advanced AI technology.
Sources familiar with the issue said the goal is to promote AI growth in US-allied countries and force global companies to conform to American standards. The regulations sought to prevent the adversary nations from accessing the technology through intermediaries in regions such as the Middle East and other parts of Asia.
Biden moves to further restrict $NVDA & $AMD AI chip exports in final push 🤦🏻♂️ pic.twitter.com/T4F93CmS7E
— Shay Boloor (@StockSavvyShay) January 8, 2025
The Biden administration is keen on expanding semiconductor caps to most of the world to control the spread of AI technology during this period of increasing demand. According to Bloomberg, anonymous sources close to the ‘soon to be disclosed matter’ said the three-tier chip trade restrictions would be publicized as soon as January 10th.
The new AI Chip export regulations are based on three tiers
The new rules, which may hit as soon as Friday, could soon restrict semiconductor trade worldwide. The regulations would create three separate levels of export controls.
The U.S. would allow close allies unlimited access to American chips while stopping them altogether to adversarial nations. However, most countries would have limits on how much computing power they can bring in.
The first tier, representing the most ‘permissive’ territories, included North America, parts of Western Europe, Australia, and Japan. Over 80% of the African region, ~90% of Latin America, and parts of Eastern Europe were in the second tier. Most countries in the Middle East, Russia, and Asian countries, including China, were in the third tier (most restrictive).
One source said the U.S. is hoping to persuade nations in the third tier to agree to follow U.S. security and human rights rules to surpass their national caps. This arrangement is a validated end-user (VEU) designation that enlists trusted organizations to make and use AI technology safely. The aim is to make AI ecosystems secure globally and prevent misuse.
Nvidia, the leading AI chip developer, saw its shares plummet by 1% after Bloomberg reported on the matter. The company’s shares had surged by 4% since the year began, following historic gains in the last two years. The rise of artificial intelligence made Nvidia rank as the largest chipmaker worldwide. Similarly, shares of Nvidia’s largest rival, Advanced Micro Devices Inc., also plummeted by about 1%.
Nvidia and the SIA disagree with the new policies, citing an economic growth threat
Nvidia commented on the proposed regulations, disagreeing with the Biden administration. According to the chipmaker, the restricting rule meant to curb global exports would not suppress the existing risk of misuse but have devastating effects on the U.S. economy and the country’s leadership.
Nvidia also added that the emerging trend in the demand for amalgamated technologies such as accelerated computing is a huge opportunity for the U.S. to capitalize on, with immense potential to boost the U.S. economy and promote job creation in the jurisdiction.
The Semiconductor Industry Association (SIA) also disagreed with the policy, stating that a policy change of this magnitude should not be pushed hastily during a shift in administration. The association also said that the U.S. needs to align its policies to compete and win at the international level.
The U.S. has a monopoly in the chip-making business. Its technology outperforms that developed in countries such as China, prompting companies and countries worldwide to go above and beyond to gain access to U.S.-manufactured chips. The new regulations also sought to restrict the export of artificial intelligence model weights that play a critical role in software that processes data and makes meaningful decisions.
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