The White House unveiled sweeping new limits on the sale of advanced AI chips by Nvidia Corp. and its peers, leaving the Trump administration to decide how and whether to implement curbs that have encountered fierce industry opposition.
The rules, which are set to take effect in one year, establish caps on the amount of computing power that can be sold to most countries. Businesses in those places can bypass national limits by agreeing to a set of security and human rights standards, US officials said Sunday.
Companies will have a 120-day comment period — which is exceptionally long — to give the Trump administration time to get settled in and make changes to the rule after consulting with industry and other countries, Commerce Secretary Gina Raimondo told reporters ahead of the release.
Raimondo stressed that the Biden administration sought to strike a balance between protecting national security and allowing trade in chips to continue. Supply chain activities and gaming chips are excluded from the new curbs, she added. And Washington will waive licensing for the sale of chips with low collective computing power, such as to universities and research institutes.
“This is very hard, and no rule is perfect,” she said. “Managing the national security risks requires delicate tradeoffs that take all of this into account.”
China’s growing technological prowess has spurred concern in the US. The move to curb the sale of AI chips used in data centers on both a country and company basis has the goal of concentrating artificial intelligence development in friendly nations and getting businesses around the world to align with American standards, Bloomberg News previously reported. The Biden team discussed the measures with its successors, and one US official said export controls have largely been a bipartisan national security priority.
Similar to the rules for importing countries, companies in the US and nearly 20 allied countries can agree to US government standards and win permission to ship to the restricted nations.
To get that approval, they’ll have to keep the majority of their computing power in friendly territories. The approval would not extend to data centers in China, Russia, Macau and some 20 other locations for which the US has an arms embargo. The US has effectively banned AI chip shipments to those places.
Shares of Nvidia fell as much as 4.7% to $129.51 after trading opened in New York on Monday. Shares of peers Advanced Micro Devices Inc. and Intel Corp. declined as much as 1.4% and 2%, respectively, in line with a broader market pullback.
The goal of the measures, which companies such as Nvidia and Oracle Corp. have warned could be catastrophic for the US tech industry, is to ensure that the global development of AI aligns with American standards and relies on US — not Chinese — technology.
“It ensures that the infrastructure for training frontier AI, the most exquisite AI systems at the frontier, happens either in America or in the jurisdictions of our closest allies, and that that capacity does not get offshored like chips and batteries and other industries that we’ve had to invest hundreds of billion dollars to bring back onshore,” National Security Advisor Jake Sullivan told reporters.
But companies and key lawmakers have warned that the restrictions could actually drive customers toward products from Chinese companies, including the blacklisted Huawei Technologies Co., if they are unable to purchase preferred American offerings or if the associated security requirements are too onerous.
Nvidia Sees ‘Overreach’
The Biden administration’s rule “threatens to squander America’s hard-won technological advantage” by “attempting to rig market outcomes and stifle competition,” Ned Finkle, Nvidia’s vice president of government affairs, said in a statement.
“As the first Trump administration demonstrated, America wins through innovation, competition, and by sharing our technologies with the world — not by retreating behind a wall of government overreach,” Finkle said.
Senators Ted Cruz and Maria Cantwell, the top Republican and Democrat on the Commerce Committee, made that argument in a December letter to Raimondo.
“Such draconian restrictions would severely hinder the sale of US technology abroad and risk driving foreign buyers to Chinese competitors like Huawei,” they wrote.
In a statement last week, ahead of the rule’s official publication, Cruz said that he would consider “every tool” — including the Congressional Review Act — to protect American industry from “unnecessary overreach.” The CRA allows Congress to overturn certain rules by executive agencies.
China firmly objected to the new US AI restrictions, criticizing the current administration for violating the rules of international trade.
“The Biden administration has abused export control measures, seriously hindering normal economic and trade exchanges between countries, seriously undermining market rules and international economic and trade order, seriously affecting global scientific and technological innovation,” the Chinese Ministry of Commerce said in a statement Monday. “China will take necessary measures to resolutely safeguard its own rights and interests.”
Other lawmakers — including the bipartisan leaders of the House China Select Committee — favor the Biden administration’s approach. Jimmy Goodrich, senior adviser to RAND for technology analysis, said Chinese AI chips aren’t globally competitive for now.
“Due to export controls, China has been unable to produce a sufficient quantity of AI chips even for its own domestic demand, and even then, they are at least one to two generations inferior to American chips,” he said.
Additionally, the rules establish export controls on so-called closed model weights for the first time. They control how AI models process data and generate responses and predictions.
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