Biden Administration's AI Chip Plan Faces Senate Opposition

Investing.com — A plan by the Biden administration to limit the number of artificial-intelligence (AI) chips that companies can install in computing facilities in certain countries has been challenged by two U.S. senators. The plan was designed to prevent China from accessing AI chips outside its borders, with exports of the most advanced AI chips, such as those made by Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD), already requiring a license from the Commerce Department.

Washington Democrat Maria Cantwell and Texas Republican Ted Cruz expressed their concerns in a letter to President Biden on Thursday. They warned that the proposed restrictions could significantly impede the sale of U.S. technology overseas and potentially drive foreign buyers towards Chinese competitors like Huawei. Huawei, a Chinese telecommunications giant, has developed its own AI chips, but they do not perform as well as the top-tier American alternatives.

The senators' letter highlighted that Congress had not been consulted about the restrictions, and companies had not been given the chance to advise on the potential consequences. They emphasized that chips are essential to U.S. leadership in a broad array of future technologies and cautioned against undermining American-based operations with arbitrary caps on product sales.

The Biden administration has frequently used export controls in an attempt to restrain China’s chip industry. This includes restrictions on AI chip sales to China, as well as sales of equipment used to manufacture advanced chips in the country.

In addition to these measures, the administration is supervising the Chips Act, which provides tens of billions of dollars in funding for new U.S.-based chip-making facilities, as well as research and development.

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