NVIDIA believes AI Diffusion ruling is misguided

Ned Finkle, vice president for government affairs at NVIDIA stated that the restricted access to mainstream computing applications and the misguided AI Diffusion rule could threaten to derail innovation and economic growth globally.

The Biden Administration recently released an Interim Final Rule on Artificial Intelligence Diffusion which build up on previous chip controls that focuses on national security and the economy. The requirement of the new control includes the absence of restrictions to chip sales to the US’s 18 key allies and partners.

However, the ruling also has also raised some eyebrows among chip manufacturers and countries that manufacture chips. This is because they feel the diffusion ruling would not only hinder AI development but also see countries opting to relook at their chip supply.

“Even as it encourages the diffusion of U.S. 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,” the White House said in a statement.

Following this, NVIDIA has released a statement calling the AI Diffusion ruling misguided. Ned Finkle, vice president for government affairs at NVIDIA stated that the restricted access to mainstream computing applications and the misguided AI Diffusion rule could threaten to derail innovation and economic growth globally.

“In its last days in office, the Biden Administration seeks to undermine America’s leadership with a 200+ page regulatory morass, drafted in secret and without proper legislative review. This sweeping overreach would impose bureaucratic control over how America’s leading semiconductors, computers, systems and even software are designed and marketed globally. And 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,” said Finkle in the statement.

Finkle also believes that the rulings would do nothing to enhance US security but only control technology worldwide. He also stated that this would only weaken the country’s global competitiveness.

“Although the rule is not enforceable for 120 days, it is already undercutting U.S. interests. As the first Trump Administration demonstrated, America wins through innovation, competition and by sharing our technologies with the world — not by retreating behind a wall of government overreach. We look forward to a return to policies that strengthen American leadership, bolster our economy and preserve our competitive edge in AI and beyond,” concluded Finkle.

Meanwhile, John Neuffer, President and CEO of the Semiconductor Industry Association (SIA) said the regulatory action imposes global restrictions and onerous licensing requirements on US exports of advanced integrated circuits. In a statement by SIA, he said that several regulations have already been implemented in recent years to control and restrict access to advanced semiconductors.

“We’re deeply disappointed that a policy shift of this magnitude and impact is being rushed out the door days before a presidential transition and without any meaningful input from industry. The new rule risks causing unintended and lasting damage to America’s economy and global competitiveness in semiconductors and AI by ceding strategic markets to our competitors. The stakes are high, and the timing is fraught. We stand ready to work with leaders in Washington to chart a path forward that protects national security while allowing us to do what America does best – compete and win globally,” said Neuffer.

Asia responds to AI Diffusion ruling

China, which continues to be impacted by tech sanctions by the US government, responded to the new rulings. The country’s Commerce Ministry stated the regulations to be “another example of generalising the concept of national security and abusing export controls” and a “blatant violation” of international multilateral economic and trade rules.

According to a report by South China Morning Post, the ministry said in its official statement, that “China firmly opposes this,” and that it would take countermeasures to safeguard its interests.

Over in Southeast Asia, several countries have already prepared for the new ruling and are now waiting to see how they can go forward with their AI development. In Malaysia, the National AI Office said the new rulings could impact the country’s AI development plans. However, the government agency also believes that the specifics of the blockade are still vague and require thorough consideration by the Malaysian government.

Separately, The Edge reported that YTL Power International, a Malaysian company that is setting up AI data centers with NVIDIA, believes it will not be impacted by the AI Diffusion ruling. The company is the first non-US company selected in Asia to partner Nvidia to deploy and manage a supercomputer driven by the GB200 Blackwell GPUs or graphic processing units in the region.

“We are confident that we will not be affected by the latest announcement on the limitation on the export of GPUs. We understand that American hyperscalers, which include Nvidia, are not subject to the limits. As the only non-US company selected by Nvidia in Asia to deploy its latest chips on its DGX Cloud AI platform, there should be no issue with our roll-out,” he said.