Biden Unveils New AI Chip Export Restrictions Targeting China and Russia

Washington: President Biden just announced some new export restrictions on AI chips. These rules are aimed at limiting access for China and Russia, especially for chips made by companies like Nvidia and AMD. The idea is to keep advanced AI development concentrated in countries that are allies of the US.

Interestingly, about 15% of Nvidia’s revenue last quarter came from China and Hong Kong, which shows how significant that market is for them. The White House said that chip sales to 18 US allies won’t face these restrictions, and chips below certain computation thresholds will be exempt too.

These new rules are set to kick in 120 days after they’re published. They also allow entities outside of close US allies to buy up to 50,000 advanced GPUs per country. Nvidia wasn’t too happy about this. Their VP, Ned Finkle, called the restrictions “unprecedented and misguided,” saying they could hurt innovation and economic growth globally.

Finkle argued that while these rules are framed as anti-China measures, they won’t really boost US security. He pointed out that the new rules would control technology that’s already widely available in consumer products. Nvidia also mentioned that the country cap could impact mainstream computers everywhere without actually enhancing national security.

In the last quarter, Nvidia made about $5.4 billion from sales in China and Hong Kong, which is a big chunk of their business. The US already has some curbs in place to stop adversaries from using advanced AI for military upgrades. Just last November, the Department of Commerce rolled out the Advanced Computing Chips Rule, limiting what Nvidia can sell in China.

However, a New York Times investigation found that some companies have been finding ways around these bans, selling Nvidia’s top chips to state-affiliated groups in China. Meanwhile, the Biden administration has been trying to boost the domestic chip industry with tax breaks and subsidies, pouring nearly $30 billion into it through the 2022 CHIPS Act.

This act is a massive $280 billion package aimed at supporting semiconductor innovation in the US, benefiting companies like Intel, Micron, AMD, and Microchip Technology. Interestingly, President-elect Donald Trump has criticized the CHIPS Act, suggesting that tariffs would have been a better way to encourage overseas chipmakers to set up factories in the US, which he believes would create jobs.