Nvidia says new Biden AI rules undermine US interests

Nvidia is not mincing words about a new set of artificial intelligence rules issued by departing President Joe Biden that will cap computer chip sales to some countries.

“In its last days in office, the Biden administration seeks to undermine America’s leadership with a 200-plus-page regulatory morass, drafted in secret and without proper legislative review,” reads a statement from Ned Finkle, vice president of government affairs at Nvidia.

The statement comes after the Biden administration announced an “interim final rule on artificial intelligence diffusion” that it says will help thwart smuggling, close loopholes and raise AI security standards.

Many say the recent announcement is largely aimed at US efforts to blunt AI technological advancement in China.

The rules revolve around six mechanisms that the White House says will “catalyse the responsible diffusion of US technology” to the rest of the world. One rule states there will be no restrictions for 18 key US allies and partners.

Several media outlets report that Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Republic of Korea, Spain, Sweden, Taiwan and the UK are the countries exempt from restrictions.

Another rule states that “chip orders with collective computation power up to roughly 1,700 advanced GPUs do not require a licence and do not count against national chip caps”.

“Even as it encourages the diffusion of US technology, the rule takes significant steps against countries of concern, constraining them from accessing advanced AI systems and the computing power used to train them,” reads a White House fact sheet.

In a rare move, however, Nvidia, the California-based chip designer and maker of graphics processing units that has been at the centre of the recent AI economic boom, has come out against the rules, going so far as to mention Mr Biden's soon-to-be successor, president-elect Donald Trump.

“The first Trump administration laid the foundation for America’s current strength and success in AI, fostering an environment where US industry could compete and win on merit without compromising national security,” Mr Finkle and Nvidia's statement reads.

“That global progress is now in jeopardy. The Biden administration now seeks to restrict access to mainstream computing applications with its unprecedented and misguided 'AI Diffusion' rule, which threatens to derail innovation and economic growth worldwide."

A source at Nvidia told The National that the new rules will make it harder for other countries to build capacity for “non-frontier AI use cases”.

Frontier AI is a term used to describe highly capable AI models and technologies that could pose severe risks to public safety.

“This would capture a lot of GPUs that are included in gaming and other applications like health care and scientific research that don't have anything to do with frontier AI,” the source said. “What we suggested is that if the administration has concerns on national security on frontier AI, the best way to manage that risk is to focus on clusters of GPUs of 100k plus or 400k plus, which is what is needed to do frontier AI.”

The Biden administration, however, has described the new AI rules as a way to streamline licensing hurdles for large and small chip orders, while also “providing clarity to allied and partner nations about how they can benefit from AI”.

The rules also state that some entities will have the ability to obtain “universal verified end user” status if they meet high security and trust standards.

“This trusted status is granted on a global and enduring basis, allowing responsible entities to expand rapidly and flexibly, and strengthening US and allied global leadership while keeping frontier training at home,” the White House said.

Yet in Silicon Valley, where frictionless commerce is celebrated and regulations are sometimes viewed through a sceptical lens, the recent AI announcement from Mr Biden has fallen short.

“This sweeping overreach would impose bureaucratic control over how America’s leading semiconductors, computers, systems and even software are designed and marketed globally,” Mr Finkle wrote on the Nvidia blog.

“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.”

It is not clear if the incoming Trump administration will uphold the new rules issued by Mr Biden in his final days in office, but throughout the campaign last year, Mr Trump promised to undo many efforts by Mr Biden aimed at regulating the AI and cryptocurrency sectors.

The Information Technology & Innovation Foundation (ITIF), a technology trade group based in Washington, said that the new rules unfairly pressure nations to choose between the US and China, which could potentially backfire on the US and US-based technology companies.

"The administration risks alienating key partners and inadvertently strengthening China’s position in the global AI ecosystem," wrote ITIF Vice President Daniel Castro.

"Confronted with such an ultimatum, many countries may opt for the side offering them uninterrupted access to the AI technologies vital for their economic growth and digital futures—and currently, only one country is threatening to cut them off from these technologies."