Most U.S. presidents avoid taking major legislative action during the final stages of their term. But Biden has broken from this trend, announcing plans to enhance a previously implemented policy even further.
Any decisions Biden makes between now and Trump’s swearing-in ceremony could be short-lived, as the new president may decide to reverse them. However, this one concerns an area of technology that Trump didn’t spend much time focusing on during his first term.
As such, it is unclear if Biden’s plans for this industry will have wide-ranging implications and for how long they will remain in place. While much remains unknown, reports indicate that these regulations could be issued as soon as Friday, January 10, 2025.
U.S. President Joe Biden has made a decision that could significantly impact multiple fast-growing areas of the tech sector. (Photo by Andrew Harnik/Getty Images)Andrew Harnik/Getty Images
Biden’s new plan has massive implications for the tech sector
During Biden’s time in office, the field of artificial intelligence (AI) has grown significantly, largely due to the launch of ChatGPT. This has kicked off a surging demand for the graphics processing units (GPUs) that power the ever-advancing AI large language models (LLMs).
As the President of the United States presiding over this pivotal tech era, Biden has taken multiple steps to curb AI chip exports to certain nations, specifically those with whom the U.S. has a hostile relationship, such as Russia and China.
In October 2022, his administration announced new semiconductor export controls which the administration updated one year later. Now reports indicate that Biden is planning to further limit AI chip exports “on both a country and company basis.”
According to Bloomberg, there are two primary incentives for this decision: to concentrate the development of valuable AI chips in friendly nations and compel businesses across the globe to align with U.S. standards.
Sources indicate that there will likely be three different tiers of these chip curbs, which will be implemented by the end of the week.
“At the top level, a small number of US allies would maintain essentially unmitigated access to American chips. A group of adversaries, meanwhile, would be effectively blocked from importing the semiconductors. And the vast majority of the world would face limits on the total computing power that can go to one country.”
The group of U.S. allies will likely include nations such as Germany and the Netherlands, as well as Japan, South Korea and Taiwan. Under the restrictive tiers, though, countries such as China and Russia would be impacted, as well as the roughly two dozen states with whom the U.S. maintains an arms embargo.
As U.S. chips are said to consistently outperform Chinese ones at AI and computational tasks, the nation has maintained quite a bit of power as a global AI leader. But this raises the question of whether it makes sense to leverage it as a tool of diplomacy.
Nvidia hits back at Biden’s decision on AI chips
For U.S. companies, federal restrictions on AI chip exports aren’t new. These policies date back to October 2022 and have been updated multiple times since then. But the fact that shares of leading chipmakers such as Nvidia (NVDA) and Advanced Micro Devices (AMD) suggests that the industry’s outlook isn’t positive.
Both AI stocks have still enjoyed substantial growth over the past several years, despite policies that have limited their ability to sell advanced AI processors to nations such as Russia and China.
Nvidia made it clear that it does not approve of Biden’s decision. The company issued a statement, laying out its take on the matter, stating that “A last-minute rule restricting exports to most of the world would be a major shift in policy that would not reduce the risk of misuse but would threaten economic growth and US leadership.”
Additionally, Nvidia argued that the U.S. should cultivate the fast-growing market for accelerated computing, highlighting its likely ability to create jobs and drive economic growth.
How Trump will approach this matter when he takes office remains to be seen. However, he will be advised by Tesla (TSLA) CEO Elon Musk and former PayPal (PYPL) executive David Sacks, both of whom are staunch supporters of AI development.
Trump has already switched a previous stance on H-1B visas for international tech workers, aligning himself with Musk on the issue. This suggests that if these tech leaders advocate for policies that favor AI development on a global scale, including broader chip exports, he won’t fight them on it.
