By Asa Fitch and Liza Lin
The U.S. is imposing some of its strongest measures yet to limit Chinese advances in artificial intelligence, requiring companies to get government approval to export certain information about their AI models and set up large AI computing facilities overseas.
The rules, out Monday, are a final push by the Biden administration in a yearslong effort to use export controls to stem China's advances in chip-making and AI, and they have sparked a backlash from companies including Nvidia. The rules impose caps on how many advanced AI chips can be exported to certain countries and require a license to export the data that underpins the most sophisticated AI systems.
Strict sales restrictions on these chips are already in place for China, Iran and other U.S. adversaries, and the new rules carve out exemptions for a group of 18 close U.S. allies and partners. These include countries such as the U.K., France and Germany, a senior administration official said. But a broad category of more than 120 other countries, including U.S. allies in the Middle East and Asia, are set to face new hurdles in setting up huge AI computing facilities.
Commerce Secretary Gina Raimondo, whose department oversees export controls, said the new curbs allowed the U.S. to diffuse its technology across the world while preserving national-security interests that could be jeopardized if adversaries were able to harness AI to enhance their militaries.
Tech companies decried the move. Ned Finkle, Nvidia's vice president of government affairs, said in a blog post Monday morning that global progress in AI that fueled growth for industries around the world "is now in jeopardy."
"This sweeping overreach would impose bureaucratic control over how America's leading semiconductors, computers, systems and even software are designed and marketed globally," he wrote. "And by attempting to rig market outcomes and stifle competition -- the lifeblood of innovation -- the Biden administration's new rule threatens to squander America's hard-won technological advantage."
While the impact of the rules isn't yet clear, they threatened to limit sales of AI chips from Nvidia, which has built a large business out of satisfying demand for AI infrastructure in countries such as the United Arab Emirates and Saudi Arabia. Company officials said they expected to bring in almost $10 billion of revenue last year from so-called "sovereign AI," where countries around the world increasingly see AI computing facilities as national assets.
The restrictions are subject to a 120-day comment period and could be modified, Raimondo said. Companies will also have a year to comply with the rules that apply to data centers where cutting-edge AI chips are housed, she said.
The rules had been hotly debated in Washington for weeks as the Trump administration prepares to take over.
Tech-industry groups came out strongly against them even before they were finalized, a rare public rejection. In a blog post, an executive at Oracle, one of the largest operators of AI infrastructure, called it "the mother of all regulations."
The rules drew strong support from some China hawks who saw earlier attempts to limit China's ability to harness advanced AI systems as inadequate. Previous rounds of export restrictions on AI chips and chip-making equipment have slowed China's industry, but the country and its companies have found workarounds, from smuggling in AI chips to using engineering tricks to continue advancing chip-making.
Jimmy Goodrich, a senior adviser to the Rand Corporation for technology analysis, said the rules were critical for U.S. tech leadership and national security. "It comes down to whether you think supercomputers capable of training the most advanced AI systems or modeling nuclear weapons should be in the U.S. and close allied nations or not," he said.
Under the new rules, companies that produce AI models -- the likes of OpenAI and Google -- would need export licenses to send the "weights" attached to those models to many foreign countries. Model weights are the secret sauce in advanced AI systems like ChatGPT, a series of digital knobs that fine-tune their performance.
The controls won't apply to models with weights that are publicly available, the most prominent of which are Meta's Llama models.
The caps on exports of AI chips apply in different ways to different countries and companies.
The 18 close U.S. allies will face no restrictions on purchases of chips. And smaller orders from customers around the world -- up to around 1,700 advanced AI chips -- won't require a license or count against caps on countries' chip purchases, the Commerce Department said.
That leaves the question of whether companies based in the U.S. or its allies can build significant AI capacity in a country falling into a middle zone -- neither trusted ally nor top adversary. The Commerce Department said yes, but with limits. Companies that meet high security standards can apply for a status that allows them to place up to 7% of their global AI computing capacity in any single such country. That could be as many as hundreds of thousands of chips, the department said.
A further category of companies based in countries that aren't U.S. adversaries can apply for a status allowing them to buy up to the equivalent of 320,000 of today's advanced AI chips over the next two years. Those that don't get this status can still buy up to the equivalent of 50,000 advanced AI chips.
The limits suggest many countries could be challenged in setting up AI computing facilities capable of competing with the largest and most advanced in the U.S. and its closely allied countries. Some of the biggest AI computing facilities in the U.S. contain huge numbers of Nvidia's AI chips, including the Colossus supercomputer being built by Elon Musk's xAI in Memphis, Tenn., which is being scaled up to include 200,000 of them.
The biggest American tech companies could be affected too, both in their ability to sell AI systems and set up computing infrastructure around the world.
Write to Asa Fitch at asa.fitch@wsj.com and Liza Lin at liza.lin@wsj.com
(END) Dow Jones Newswires
January 13, 2025 06:00 ET (11:00 GMT)
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