Who Wins If The New Biden AI Export Rules Stand?

While Nvidia and the European Union have expressed their displeasure with the latest salvo of AI export restrictions from the Biden administration, a few companies and countries could actually benefit from them. But the industry as a whole will suffer, and so will American technology leadership.

Nvidia is clearly upset, and rightly so, about the new rules, which restrict sales to all but 18 US buddies. Nvidia says these restrictions will limit how much the have-nots will be able to build AI to help their economies and population, and favor America’s 18 wealthy partners in the deployment of AI for good. This new policy is so short-sighted, I’m ashamed to call myself a Democrat.

The Impact is Not Pretty

These limits will drive AI developers and users of AI in two directions. First, the Chinese AI companies building chips and AI models will benefit tremendously over the coming years. Yes, their chips are slower, and their software is immature, but at least you can get them. And if you are in Africa, South America or Asia, these platforms may become your best and perhaps only choice. The development of sovereign AI is not optional. It is a national priority for many countries.

Secondly, cloud server providers in the US will win as developers in other countries find ways to circumvent the rules and access GPUs or CSP ASICs to train and use the AI models they need.

The Threat From China (and India)

India and China are already building a talent pool that makes the US look vulnerable to long term competition in AI. According to a report released today from the US White House, “Not only is China producing more S&E PhDs than the United States, but the gap is widening. In 2018, China produced 65 percent more S&E PhDs than the United States. In 2022, China produced 99 percent more S&E PhDs than the United States—nearly double. “

Now, the US government argues that preventing China from accessing our hardware will slow them down, and it will. But for how long? And won’t they all use and improve indigenous silicon instead? And even if you buy this strategy, limiting access to AI hardware in other countries only hurts them and the US; not China. “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,” said Ned Finkle, vice president of government affairs at NVIDIA.

The Net Effect

The bottom line is 1) American Technology companies will be prevented from realizing potential sales to countries who are not among the 18 lucky ones, 2) the Rest-of-the-World will be left out of the AI revolution or forced to buy inferior hardware, and 2) Chinese technology firms will fill that vacuum, both in China and elsewhere.

Why are we helping China challenge our hard-earned technology leadership in AI? Champaign corks are popping in Shanghai.