Outgoing US government upsets everyone with one last round of chip export restrictions

Over the course of the past four years, while Joe Biden was US President, America’s position on China evolved from concerns about the risks associated with having Huawei or ZTE kit in its 5G networks, to an attempt to stifle the country’s technological progress. Of course, this is all done in the name of ‘security’, but the collateral damage done even to those ostensibly under America’s protection has been considerable.

The latest bright idea is called the Regulatory Framework for the Responsible Diffusion of Advanced Artificial Intelligence Technology. Having already decided China isn’t allowed a bunch of technologies in case they find their way into weapons used in a future war some parts of the US state seem so keen on, it seems China can’t be trusted with AI either.

“This new regulation serves key U.S. national security and foreign policy interests and supports the Biden-Harris Administration’s broader strategy to cultivate a secure and trusted technology ecosystem for the responsible use and diffusion of AI," opens the announcement from the US Bureau of Industry & Security. Countless apparatchiks also get their 15 seconds of fame via canned quotes in the release too.

“This policy will help build a trusted technology ecosystem around the world and allow us to protect against the national security risks associated with AI, while ensuring controls do not stifle innovation or US technological leadership,” said U.S. Secretary of Commerce Gina Raimondo.

“The United States has a national security responsibility to preserve and extend American AI leadership, and to ensure that American AI can benefit people around the world,” said National Security Advisor Jake Sullivan. “Today, we are announcing a rule that ensures frontier AI training infrastructure remains in the United States and closely allied countries, while also facilitating the diffusion of American AI globally,”

And so on. Can you see a pattern emerging? The US increasingly feels entitled to inconvenience and bully the rest of the world in furtherance of its own interests, in an increasingly desperate effort to cling on to its crumbling position as sole global hegemon. Depressingly, the incoming President seems to be saying ‘hold my beer’ to Biden with his stream of consciousness ramblings about annexing neighbouring countries and renaming the Gulf of Mexico.

The policy document is an indigestible tome, which expedience and mental health precautions preclude us from reading. However, we know from the BIS announcement that it adopts a three-pronged strategy. The first prong ‘updates controls for advanced computing chips,’ the second ‘institutes new controls on the model weights of the most advanced closed-weight AI models,’ and the third is some barely intelligible stuff that seems to be about controlling the secondary chip market.

In lieu of actually reading the thing, public response offers a good sense of its key features and merits. “We are concerned about the US measures adopted today restricting access to advanced AI chip exports for selected EU Member States and their companies,” said the EU. “We have already shared our concerns with the current US administration and we are looking forward to engaging constructively with the next US administration.”

“We’re deeply disappointed that a policy shift of this magnitude and impact is being rushed out the door days before a presidential transition and without any meaningful input from industry,” said John Neuffer, CEO of the US Semiconductor Industry Association. “The new rule risks causing unintended and lasting damage to America’s economy and global competitiveness in semiconductors and AI by ceding strategic markets to our competitors.”

“The Biden Administration now seeks to restrict access to mainstream computing applications with its unprecedented and misguided ‘AI Diffusion’ rule, which threatens to derail innovation and economic growth worldwide,” wrote Ned Finkle, VP of government affairs at US chip giant Nvidia, in a blog that’s worth reproducing at length.

“While cloaked in the guise of an ‘anti-China’ measure, these rules would do nothing to enhance U.S. security,” he continued. “The new rules would control technology worldwide, including technology that is already widely available in mainstream gaming PCs and consumer hardware. Rather than mitigate any threat, the new Biden rules would only weaken America’s global competitiveness, undermining the innovation that has kept the U.S. ahead.

“Although the rule is not enforceable for 120 days, it is already undercutting U.S. interests. 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. We look forward to a return to policies that strengthen American leadership, bolster our economy and preserve our competitive edge in AI and beyond.”

Welcome to the party, pal. Maybe the strength of (apparently universal) negative sentiment towards what is just the latest such US state initiative will create a high water mark for such folly, but that’s probably just wishful thinking. Then again Trump may feel inclined to reverse the move simply as a snub to his predecessor, who knows?

US state hubris was neatly encapsulated by Biden’s recent comment that the Chinese economy will never surpass America’s. It seems the Chinese state has opted not to be drawn on that particular claim, instead stressing “China has always adhered to principles, resolutely upheld its own sovereignty, security and development interests, and resolutely and forcefully countered the wrong actions of the US side.”

What those principles are is another matter entirely but, presumably, one of those ‘wrong actions’ is the US attempt to force the sale of social media company TikTok. It has been reported that China is considering allowing its sale to Elon Musk but a TikTok spokesperson told Variety that the reporting is “pure fiction”.

China, of course, is continuing to retaliate with countermeasures of its own, with Nikkei Asia reporting that “China is increasing its scrutiny of exports by Apple and other American companies,” thus apparently damaging their attempts to do business in much of Asia. Meanwhile Reuters reports that Biden, drawing on surprising reserves of vigour at this eleventh hour, is also trying to ban the import of Chinese vehicles to the US.

You don’t have to be an ardent pacifist to see that US trade policy has become needlessly belligerent and counterproductive. Will there ever come a point at which it concludes that, in this context, the cure now does more harm than the disease? Nearly all of the world, including many US companies, must be hoping so. You can hear more discussion of this topic in our latest podcast.