News Analysis
This week marked some big changes in the AI world.
On Monday, President Joe Biden announced a new system for controlling AI chips that will place limitations on exports to more than 100 countries, with some nations facing complete bans.
The next day, Biden unveiled his executive order on AI infrastructure, a multi-pronged plan designed to keep new construction for advanced AI operations on US soil. “Cutting-edge AI will have profound implications for national security and enormous potential to improve Americans’ lives if harnessed responsibly, from helping cure disease to keeping communities safe by mitigating the effects of climate change,” Biden claimed. “However, we cannot take our lead for granted.”
Several big tech companies — including Nvidia, Google and Microsoft — have already spoken out about these changes.
The New Rules Governing AI Chip Exports
Under Biden’s new chip regulations, 18 key allies, including Canada, Japan, Korea, the UK and Germany, will keep unrestricted access to US AI tech.
Another 120 countries — Israel, Mexico, Portugal, Switzerland and Saudi Arabia, among others — will face strict limits on how many chips they can buy. And a handful of countries, such as China, Russia, Iran and North Korea, won’t be able to buy chips at all.
US Secretary of Commerce Gina Raimondo said in a statement that “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.”
Tech companies can apply for permits to get around some of these limitations. But to do so, they’ll need to meet strict security requirements, keep at least half of their AI computing power in the US and limit any single country outside the listed allies to no more than 7% of their total computing capacity.
Related Article: 10 Top AI Chip Companies
Biden’s Plan to Strengthen AI Infrastructure in the US
Biden’s latest executive order is meant to ensure that the infrastructure needed for advanced AI operations — such as clean power facilities and gigawatt-scale AI data centers — can be built with speed and at scale in the US.
Jeff Le, who served as California's Deputy Cabinet Secretary under former Governor Jerry Brown, explained that while data is critical for AI, reliable energy and power are as important for compute. "From what I have seen in California, the permitting process is very challenging and new facilities and operations must be constructed to handle the massive amount of power." This intergovernmental effort, he added, allows for a number of solutions to these energy challenges.
As part of the order, the Department of Defense and Department of Energy will lease federal sites where the private sector can build AI infrastructure. Developers selected to build on these sites will be required to bring online the necessary clean energy generation resources to match the full electricity needs of their data centers, as well as pay all costs of building and operating AI infrastructure in a way that does not raise electricity prices for consumers.
Suriel Arellano, author of “Leading in the Age of AI” and former senior digital manager, Latin America, at IBM, said the clean energy requirement of this order is smart and forward-thinking. "It mandates that developers bring clean power generation to match their data-center capacity needs. This is significant — because AI has energy needs, and those needs are considerable."
Data centers alone are expected to use a significant portion of energy from the electrical grid, he explained, and they're using a whole lot of fossil fuels and not a whole lot of renewables. This is problematic not just for climate change, but also for a technology whose major breakthroughs have been based on the availability of cheap, large-scale computing power.
“By activating the full force of the federal government to speed up and scale AI operations here in the United States, we are securing our global leadership on AI, which will have a profound impact on our economy, society, and national security for generations to come,” said Vice President Kamala Harris.
Mixed Reactions From Tech Leaders on Biden’s AI Policies
The White House has already received a great deal of criticism over these changes.
Nvidia, whose stock saw a 2% drop after the announced chip export rule, spoke out about the new restrictions, calling them “misguided.” Due to this new regulation, the company claims global progress is 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. 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.”
In an unpublished letter addressed to Biden, trade groups like the Semiconductor Industry Association (SIA) and SEMI also rebuked these decisions, reported Reuters.
“Again, these pending regulations have been developed without appropriate industry consultation or the opportunity for public comment, despite their long-term impacts and economic and international significance,” the letter claimed.
Not all who spoke out were against the new AI policies, however.
Brad Smith, vice chair and president of Microsoft, said in a tweet that the AI chip executive order “is another critical step forward in the governance of AI technology.” He added, “We look forward to working with U.S. officials to fully realize the power and promise of this emerging technology.”
Today’s executive order is another critical step forward in the governance of AI technology. This order builds on the White House Voluntary Commitments for safe, secure, and trustworthy AI and complements international efforts through the G7 Hiroshima Process. AI promises to…
— Brad Smith (@BradSmi) October 30, 2023
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Kent Walker, Google’s president of global affairs, said the tech giant looks “forward to engaging constructively with government agencies to maximize AI’s potential — including by making government services better, faster, and more secure,” reported MIT Technology Review.
In another statement, Adobe’s general counsel and chief trust officer, Dana Rao, said “It’s great to see the White House investing in AI’s growth by creating a framework for responsible AI practices.”
Related Article: Beyond Regulation: How to Prepare for Ethical and Legal AI Use
AI Policy Deadlines Loom as Industry Responds
The clock is running out for tech companies and industry leaders to speak out for or against these new policies.
Biden’s new AI chip regulations are set to take effect in 120 days, allowing a window for public comment and potential adjustments. And as outlined in the executive order on AI infrastructure, the Departments of Defense and Energy have a deadline of February 28, 2025 to identify at least three federal sites each for the construction of AI data centers and clean energy facilities.
Even with this countdown, the future of AI infrastructure and chip exportation is uncertain. A new US president is set to be sworn into office in a matter of days, and questions remain on whether these new regulations will be upheld.
"The incoming Trump administration may have different priorities, so in these last days, it is not at all certain what will happen to this executive order, or to the long-term effect, if any, that it may have," said Arellano.
Le added that the Biden administration has made inroads in creating opportunities for smaller and medium-sized companies, along with large companies, in past emerging tech initiatives, such as the CHIPS Act implementation. "The Trump administration may continue efforts to support 'Little and Medium' tech such as these smaller AI companies, as signaled by Marc Andreessen, a close adviser to President Trump and influential founder of Andreessen Horowitz.”
