Why Biden’s Final AI Chip Move Caused an Uproar

It’s the final week of the Biden presidency, and the administration kicked it off by announcing new export control rules for AI-related technologies, causing quite a stir. The rules aim to limit how many of Nvidia’s artificial intelligence chips other countries or foreign companies can obtain, helping American AI developers companies stay ahead, and to force American companies to develop large AI chip clusters primarily in the U.S.

In case you haven’t had a chance to read the 168-page Interim Final Rule on Artificial Intelligence Diffusion, the proposed rules essentially place foreign countries—and companies based there—into three tiers. Those divide a small number of countries that face no restrictions, such as Canada, from a much bigger group that face a cap on how many AI chips they can buy. A third group, including countries such as China and Russia, face a continuation of existing export prohibitions.

Surprisingly, the rules don’t appear to prevent Chinese companies such as ByteDance from quietly renting large swaths of Nvidia chips from cloud providers in other countries where chips can be exported to—something my colleagues have chronicled in great detail as being a loophole around existing AI chip restrictions.

Much of the tech industry has come out publicly against the new plan, starting with Nvidia, which published a biting blog post. If the new rules come into effect, they could squeeze Nvidia, which generates tens of billions of dollars of revenue from countries that would face restrictions on how many AI chips they can buy from the company.