The Biden administration has announced a sweeping new framework for restricting the export of advanced artificial intelligence (AI) technologies, aiming to curb access by adversaries such as China while safeguarding U.S. technological leadership.
The new “AI Diffusion” rule, introduced by the Department of Commerce, imposes stringent controls on AI chips and model parameters to prevent their misuse.
Nvidia, the leading global manufacturer of AI hardware, has issued a strong rebuke, calling the measure “an unprecedented and misguided overreach.”
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Commerce Secretary Gina Raimondo explained the administration’s position about the regulations. “The semiconductors that power [AI] and the model weights are, as we all know, a dual-use technology. They’re used in many commercial applications but also can be used by our adversaries to run nuclear simulations, develop bio weapons, and advance their militaries,” she said.
According to the administration, the rule is designed to address national security risks posed by foreign adversaries, particularly China, while maintaining the United States’ competitive edge in AI innovation.
Details of the New AI Export Rules
The new export controls divide the world into two groups: trusted allies who will retain unfettered access to U.S. AI technologies and other nations facing strict limitations or outright bans.
Trusted nations include the United Kingdom, Canada, Japan, Germany, and South Korea, among others. These countries can continue importing advanced AI chips like Nvidia’s H100 GPUs without restrictions.
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For other nations, annual caps on AI chip imports are set at 1,700 GPUs, equivalent to approximately 790 million teraflops of processing power. Companies and institutions in these countries can apply for Verified End User (VEU) status, which would grant them the ability to import up to 320,000 GPUs over a two-year period if they meet stringent security and compliance standards.
The rule also introduces controls on “model weights,” a critical component of advanced AI systems. Model weights are numerical parameters that guide AI algorithms, enabling them to perform tasks such as language generation, image recognition, and decision-making.
While open-source AI models, including Meta’s Llama, are exempt from the rule, closed-weight models face restrictions aimed at preventing their unauthorized use by adversarial nations. These measures, Raimondo argued, are necessary to prevent foreign entities from weaponizing advanced AI technologies.
Nvidia’s Strong Criticism of the Policy
Nvidia, whose GPUs are at the forefront of global AI development, has been vocal in its opposition to the new regulations. In a statement, Ned Finkle, Nvidia’s Vice President of External Affairs, accused the Biden administration of undermining U.S. leadership in AI.
“For decades, leadership in computing and software ecosystems has been a cornerstone of American strength and influence worldwide,” Finkle said. “The Biden administration’s regulatory overreach threatens to derail innovation and economic growth worldwide.”
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Finkle contrasted the new framework with policies from the first Trump administration, which he credited with creating an environment where U.S. companies could innovate and lead without compromising national security.
He argued that the new rules go too far by targeting not only advanced AI technologies but also mainstream computing applications, including gaming GPUs. “Rather than mitigating any threat, these rules would only weaken America’s global competitiveness, undermining the innovation that has kept the U.S. ahead,” he added.
Broader Industry Concerns
Nvidia is not alone in its criticism. The Semiconductor Industry Association (SIA), representing major chipmakers, expressed concerns over the rushed implementation of the rule, which spans over 200 pages.
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. See our full statement here: https://t.co/t9dBzDOYdG https://t.co/B3HfnrUwGd
— SIA (@SIAAmerica) January 13, 2025
The SIA warned that the new regulations could fragment global supply chains and cede strategic markets to competitors. An anonymous industry executive echoed these sentiments, highlighting the potential disruption to non-military applications, such as gaming and cloud computing.
Despite these criticisms, Raimondo defended the urgency of the measures. She cited the United States’ six- to 18-month lead in AI technologies, emphasizing that swift action is necessary to maintain this advantage. “The U.S. maintains a six- to 18-month lead in AI technology. Without decisive action, this advantage could erode rapidly,” she said.
Security and Competitiveness: A Delicate Balance
The regulation has introduced a 120-day review period, during which the incoming Trump administration will oversee its final implementation. This transition has raised questions about how the rule will be enforced and whether modifications will be made to address industry concerns.
Nvidia, for its part, expressed hope for a shift in policy direction under the new administration. “America wins through innovation, competition, and by sharing our technologies with the world—not by retreating behind a wall of government overreach,” Finkle stated.
The framework also provides exemptions for smaller orders of AI chips, such as those placed by academic and healthcare institutions, to ensure that research and non-commercial applications are not hindered. However, critics argue that the rule’s scope is too broad, with some questioning whether it will achieve its intended goals.
Balancing National Security with Global Innovation
The “AI Diffusion” rule marks an important moment in U.S. technology policy, reflecting the government’s attempt to strike a balance between safeguarding national security and fostering global collaboration.
While the Biden administration argues that the measures are essential to protect critical technologies, Nvidia and other industry stakeholders warn that the regulations could stifle innovation and harm America’s long-term competitiveness.