Biden administration proposes new rules on exporting AI chips, provoking an industry pushback

By JOSH BOAK and MATT O’BRIEN, Associated Press

WASHINGTON (AP) — The Biden administration is proposing a new framework for the exporting of the 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 say the rules would limit access to existing chips used for video games and restrict in 120 countries the chips used for data centers 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. The 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 United States and with its closest allies, instead of possibly getting offshored such as 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 U.S. companies at a disadvantage.

“While we share the U.S. government’s commitment to national and economic security, the rule’s potential risks to U.S. global leadership in AI cannot be emphasized enough,” said a statement from Naomi Wilson, the group’s senior vice president for Asia and global trade policy. She called for a more extensive consultation with the tech industry.

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 centers abroad.

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

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

Ned Finkle, vice president of external affairs at Nvidia, said in a statement that the prior Trump administration had helped create the foundation for AI’s development and that 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 U.S. 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, Republic of Korea, Spain, Sweden, Taiwan and the United Kingdom.

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

Institutions in certain countries could also apply for a legal status that would let them purchase 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 license to import or count against the national chip cap, among the other standards set by the framework. The exception for the 1,700 graphics processing units would likely help to meet the orders for universities and medical institutions, as opposed to data centers.