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New US controls on AI chips go beyond China, set export

quotas

for about 120 countries

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Exports to 18 allies including Japan, Britain, the

Netherlands

exempt from new rules

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Regulations aim to bolster US AI leadership

By Karen Freifeld

NEW YORK, Jan 13 (Reuters) - The U.S. government said on

Monday it would further restrict artificial intelligence chip

and technology exports, divvying up the world to keep advanced

computing power in the U.S. and among its allies while finding

more ways to block China's access.

The new regulations will cap the number of AI chips that can

be exported to most countries and allow unlimited access to U.S.

AI technology for America's closest allies, while also

maintaining a block on exports to China, Russia, Iran and North

Korea.

The lengthy new rules unveiled in the final days of

outgoing President Joe Biden's administration go beyond China

and are aimed at helping the U.S. keep its dominant status in AI

by controlling it around the world.

"The U.S. leads AI now - both AI development and AI chip

design, and it's critical that we keep it that way," U.S.

Commerce Secretary Gina Raimondo said.

The regulations cap a four-year Biden administration effort

to hobble China's access to advanced chips that can enhance its

military capabilities and seek to maintain U.S. leadership in AI

by closing loopholes and adding new guard rails to control the

flow of chips and global development of AI.

While it is unclear how President-elect Donald Trump's

incoming administration will enforce the new rules, the two

administrations share similar views on the competitive threat

from China. The regulation is set to take effect 120 days from

publication, giving the Trump administration time to weigh in.

New limits will be placed on advanced graphics processing

units (GPUs), which are used to power data centers needed to

train AI models. Most are made by Santa Clara, California-based

Nvidia ( NVDA ), while Advanced Micro Devices ( AMD ) also sells

AI chips.

Major cloud service providers, such as Microsoft ( MSFT ),

Google and Amazon ( AMZN ), will be able to seek

global authorizations to build data centers, a powerful part of

the new rules that will exempt their projects from the country

quotas on AI chips.

To obtain a stamp of approval, authorized companies must

abide by stringent conditions and restrictions, including

security requirements, reporting demands and a plan or track

record of respecting human rights.

Until now, the Biden administration had imposed sweeping

restrictions on China's access to advanced chips and the

equipment to produce them, updating the controls annually to

tighten restrictions and capture countries at risk of diverting

the technology to China.

NVIDIA FEARS 'OVERREACH'

Because the rules alter the landscape for AI chips and data

centers around the world, powerful industry voices criticized

the plan even before it was published.

Nvidia ( NVDA ) on Monday called the rule "sweeping overreach" and

said the White House would be clamping down on "technology that

is already available in mainstream gaming PCs and consumer

hardware." Data center provider Oracle argued earlier

this month the rules would hand "most of the global AI and GPU

market to our Chinese competitors."

The rules impose worldwide licensing requirements on certain

chips, with exceptions, and also set controls for what are known

as "model weights" of the most advanced "closed-weight" AI

models. Model weights help determine decision making in machine

learning, and are generally the most valuable elements of an AI

model.

The regulation divides the world into three tiers. About 18

countries, including Japan, Britain, South Korea and the

Netherlands, will essentially be exempt from the rules. Some 120

other countries, including Singapore, Israel, Saudi Arabia and

the United Arab Emirates will face country caps. And

arms-embargoed countries like Russia, China and Iran will be

barred from receiving the technology altogether.

In addition, U.S. headquartered providers likely to receive

global authorizations such as AWS and Microsoft ( MSFT ) will be allowed

to deploy only 50% of their total AI computing power outside the

United States, no more than 25% outside of the Tier 1 countries,

and no more than 7% in a single non-Tier 1 country.

AI has the potential to increase access to healthcare,

education and food, among other benefits, but also can help

develop biological and other weapons, support cyberattacks and

assist with surveillance and other human rights abuses.

"The U.S. has to be prepared for rapid increases in AI's

capability in the coming years, which could have transformative

impact on the economy and on our national security," U.S.

National Security Adviser Jake Sullivan said.