The next big offshoring battle is being played out in Washington, and this time it involves artificial intelligence.
The Biden administration, in its final weeks in office, is rushing to issue new regulations to try to ensure that the United States and its close allies have control over the development of artificial intelligence for years to come.
The rules have sparked an intense battle between tech companies and the government, as well as among administration officials.
The regulations, which could be issued as early as Friday, will dictate where American-made chips critical to AI can be shipped. Those rules would then help determine where AI-creating data centers would be built, with a preference for the United States and its allies.
The rules will allow most European countries, Japan and other close US allies to make unfettered purchases of AI chips, while blocking two dozen adversaries, such as China and Russia, from buying them. More than 100 other countries would face different quotas on the amount of AI chips they could get from US companies.
The regulations would also make it easier to ship AI chips to trusted American companies that run data centers, such as Google and Microsoft, rather than to their foreign competitors. The rules will set out the security procedures that data centers must follow to keep AI systems safe from cyber theft.
The Biden administration’s plan has prompted a backlash from U.S. tech companies, which say global regulations could slow their businesses and create costly compliance requirements. These firms also question whether President Biden should enact rules with such far-reaching economic consequences in his final days in office.
While some of the details remain unclear, the new rules could force tech companies that are pouring tens of billions of dollars into building data centers around the world to rethink some of those locations.
Artificial intelligence, which can answer questions, write code and create images, is expected to revolutionize the way countries fight wars, develop medicines and make scientific advances. Because of its potential power, US officials want AI systems to be built in the United States or allied countries – where they will have more say over what the systems do – rather than in countries where they can share that technology with China or operate in other countries. ways contrary to US national security.
Peter Harrell, a former White House economic official and a fellow at the Carnegie Endowment for International Peace, said the United States currently has a significant advantage in AI and the power to decide which countries can benefit from it.
“It is important to think about how we want these transformative developments to spread around the world,” he said.
The rules are primarily about national security: Given how AI could transform military conflict, the regulations are designed to keep the most powerful technology in the hands of allies and prevent China from gaining access to AI chips through international data centers.
But U.S. officials say data centers are also important sources of new economic activity for American communities. They want to encourage companies to build as many data centers as possible in the United States rather than in regions like the Middle East, which is offering money to attract tech firms.
Some unions have come out in support of the Biden administration’s plan. That’s because data centers are big consumers of electricity and steel. Each of these creates jobs for construction companies, electricians and HVAC technicians, as well as workers involved in power generation.
“The lab has a great interest in the future of AI and technology, not only in terms of its application, but in terms of the infrastructure that supports it,” said Michael R. Wessel, an adviser to the United Steelworkers union.
But US tech companies and their supporters argue that the rules could hinder technological developments, strain international alliances and motivate countries to buy alternative technologies from China, which is racing to develop its own AI chips.
“The danger is that in the long term, countries will say, ‘We can’t rely on the United States, we can’t import our advanced technology from the United States, because there’s always this threat that the American government would remove of us,'” said Geoffrey Gertz, a senior fellow at the Center for a New American Security.
California-based Nvidia, which controls 90 percent of the AI chip market, has lobbied against the rules in meetings with Congress and the White House, as have Microsoft, Oracle and other companies. They worry that the rules could hurt international sales.
Ned Finkle, Nvidia’s vice president of global affairs, said in a statement that the policy would harm data centers around the world without improving national security and would “push the world toward alternative technologies.”
“We would encourage President Biden not to preempt the next President Trump by adopting a policy that will only hurt the American economy, set America back and play into the hands of America’s adversaries,” Mr. Finkle added.
Tech companies have also tried to soften the impact by reaching out to the incoming administration of President-elect Donald J. Trump, which could decide whether to keep or enforce the rules, tech executives and other people familiar with the exchanges said.
Microsoft and Oracle declined to comment.
Biden officials have also clashed over regulations. Commerce Secretary Gina M. Raimondo, who is more sympathetic to industry complaints and had concerns about how the Trump administration would enforce the rules, has been at odds with the White House and other agencies, according to the three officials and others familiar with the matter. with the discussions. , who declined to be named to discuss private discussions.
Some US allies expressed concerns about the rules, officials said. And in a Dec. 19 letter to the Biden administration, bipartisan lawmakers on the Senate Commerce Committee criticized the restrictions as “draconian” and said they would “severely impede the sale of American technology abroad.”
After the White House decided to move forward, the Commerce Department pushed for additional changes to the rule, including increasing the number of chips that can be sold without a license and delaying the start of the rule for 120 days to allow the Trump administration to make changes potentially. , two officials said.
It is unclear what Mr. Trump would do about the issue, although he has recently expressed support for building data centers in the United States. His advisers include some China skeptics who are likely to favor tougher restrictions. Others, including the president’s son-in-law Jared Kushner, have business ties to countries in the Middle East that are likely to oppose any restrictions.
The new rules build on export controls the Biden administration has put in place in recent years to ban shipments of advanced AI chips to China and other adversarial countries and to require special licenses to ship AI chips to countries, including the Middle East and Southeast. Asia.
These controls have allowed the United States to exert some global influence. To gain access to Nvidia chips last year, G42, a leading AI firm in the United Arab Emirates, promised to stop using technology made by Huawei, a Chinese telecommunications firm under US sanctions.
But US concerns have grown that Chinese companies are obtaining critical technology by smuggling chips or through remote access to data centers in other countries.
Companies have also faced long waits to get licenses for even a small number of chips, and foreign officials have called directly on the Biden administration to try to get them. So officials began working last year on a more transparent distribution system.
Tech companies say the requirements could make data centers too expensive for some countries, preventing some from using AI to benefit their healthcare, transportation and hospitality industries. Among the countries that will face restrictions and other restrictions are traditional US allies such as Israel, Mexico and Poland, a member of NATO.
“We can all agree that none of these workloads or uses of the AI technology and GPUs they rely on pose national security concerns,” Ken Glueck, Oracle’s executive vice president, said in a company blog post. referred to graphics processing units or AI chips. .
Nvidia and other technology companies have also argued that the rules could backfire by driving buyers in the Middle East, Southeast Asia and elsewhere to Chinese companies like Huawei.
Some US officials disagree. An analysis that US officials put together, including consultations with private industry, argued that Chinese chipmakers faced major obstacles and would not be able to export enough chips to train more advanced AI models. The analysis was reviewed by The New York Times.
“Huawei is struggling to produce enough advanced chips to train AI models inside China, much less export chips,” said Matt Pottinger, a former deputy national security adviser to Mr. Trump and chief executive of Garnaut Global. a China-focused research firm. .
