In a move that signals the United States’ increasing vigilance over the global distribution of advanced technology, the U.S. government has extended AI national security export restrictions on artificial intelligence (AI) chips from Nvidia and Advanced Micro Devices (AMD) to include certain countries in the Middle East.
This expansion comes after similar restrictions were imposed on China, highlighting the U.S.’s ongoing efforts to control the spread of cutting-edge technology for national security reasons.
The Affected AI Chips
The chips in question are Nvidia’s A100 and H100 models, which are designed to accelerate machine-learning tasks. These chips are crucial for a range of applications, from data analytics to autonomous vehicles.
Nvidia disclosed the new restrictions in a regulatory filing, stating that the curbs would not have an “immediate material impact” on the company’s financial results.
In a separate statement, Nvidia said that the new licensing requirements “don’t affect a meaningful portion of our revenue.”
AMD also received a letter informing them of similar restrictions, and a spokesperson indicated that the move would not significantly affect its revenue either.
The U.S. Commerce Department, which administers these licensing requirements, clarified that the U.S. “has not blocked chip sales to the Middle East” but declined to elaborate on whether it had imposed new requirements on specific U.S. companies.
AI National Security Concerns
Last year, the U.S. had clamped down on China’s technological capabilities, citing concerns that the products might be used for ‘military end use’ or by ‘military end users’ in China. Its aim is to “slow the progress of Chinese military programs, which use supercomputing to model nuclear blasts, guide hypersonic weapons and establish advanced networks for surveilling dissidents and minorities, among other activities.”
While the U.S. government has been known to impose export controls for national security reasons, the specific risks posed by exports to the Middle East were not immediately disclosed.
The U.S. Commerce Department did clarify that it has not entirely blocked chip sales to the Middle East but declined to comment on new requirements for specific companies. The move is seen as part of broader U.S. efforts to control the spread of advanced technology for national security reasons.
Saudi Arabia and the United Arab Emirates (UAE) have both discussed closer AI links with China and already have strengthened ties with Russia since the Ukraine invasion. The UAE has already been accused of being a “transhipment point” used by Russia to evade sanctions.
However, we see this recent decision as ultimately about China and Russia, who we recently noted are focused on majorly ramping up their AI military capabilities.
More of the Same
In the late 2000’s, this author worked in China’s largest semiconductor company, founded by many Taiwanese-Americans in partnership with the Chinese government investment. At that time, there was a lot of optimism for China’s entrance onto the global stage and China’s political leadership to become global citizens.
Even then the US trade rules were stringent for the most advanced chipsets then as they are now. The US through the US Commerce Department’s Bureau of Industry and Security (BIS) limits where US companies can sell the latest and greatest technology to, especially when military & space applications are possible.
These latest restrictions do not appear to be much different from the long-term trade policy that the US has had against our adversaries. But the U.S.’s decision to extend export restrictions on AI chips to the Middle East is a significant development that reflects the US taking an even more cautious approach to the global dissemination of American advanced technologies.
Final Thoughts
There is some risk that this policy could affect the global competitiveness of U.S. tech firms like Nvidia and AMD. The risk comes from companies in the affected countries turning to alternative sources for AI chips, potentially giving a boost to competitors from other countries. Other risk comes from the restrictions potentially spurring on the development of indigenous technologies in the affected countries like China with long-term potential to alter the global balance of technological power.
Lastly, there is an even longer-term potential for the global tech industry and global economy to continue to fragment into politically-aligned trading blocs with strengthened partnership between China, Russia, and countries in the Middle East.
Yet all of these risks are acceptable to ensure that America’s most advanced technologies are not getting into the hands of adversarial countries and to maintain American technological leadership. We hope you’ll agree.