Biden Administration Unveils Strict Chip Controls to Curb China's AI Progress

In a move aimed at slowing China's technological advancement, the Biden administration has unveiled new technology export restrictions designed to prevent China from accessing advanced chips and AI technologies through third countries, Nikkei Asia reports. These rules, which will be enforced after a 120-day comment period unless the incoming Trump administration alters or scraps them, categorize export destinations into three categories: allies and partners; adversaries; and others.

The primary objective is to restrict countries deemed adversaries, including China, Russia, North Korea, and Iran, from accessing AI chips in data centers outside the U.S., such as those in Southeast Asia and the Middle East.

The new regulations, officially titled "regulatory framework for the responsible diffusion of advanced artificial intelligence technology," represent the culmination of the Biden administration's four-year efforts to curb China's technological progress.

Under the new rules, no fresh restrictions apply to sales of chips to 18 key U.S. allies and partners. Companies headquartered in these economies will be permitted to place up to 7% of their global AI computational capacity—potentially hundreds of thousands of chips—in third countries, excluding those under arms embargoes. Japan, South Korea, the Netherlands, and Taiwan, all crucial chipmaking economies, fall into this category.

For the vast majority of countries outside this allied group, the U.S. will require authorization for the export, re-export, and in-country transfer of chips. License applications will initially be reviewed under a presumption of approval, aiming to expedite the process. However, once a country reaches its allocation, applications will be reviewed under a policy of denial.

Singapore, Malaysia, Thailand, and Vietnam, experiencing booming demand for AI data centers, face stricter export license requirements. A presumption of denial will apply, regardless of quantity, for the 22 countries under arms embargoes, including Cambodia and Myanmar.

"The point of this policy, among other things, is to make it extremely difficult for China to successfully smuggle large amounts of chips into China, and also to create significant incentives for leading AI companies and leading cloud companies to build most or all of the AI infrastructure in the U.S.," Gregory Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies, told Nikkei Asia.

The new rules have drawn criticism from industry figures, who argue they were drafted without consultation. Nvidia, a leading American maker of graphics processors used in AI, issued a statement criticizing the policy's potential to stifle innovation and harm U.S. competitiveness.

The Washington-based Semiconductor Industry Association also expressed disappointment, stating 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 group warned that the new rule risks causing unintended and lasting damage to America's economy and global competitiveness.

The framework also introduces new controls on the "model weights" of the most advanced AI models. Model weights refer to the numerical parameters that AI software uses to make predictions or control decisions. The rules require authorization for the export, re-export, and in-country transfers of such weights.

Models with widely available model weights, such as open-weight models, would not be subject to controls, the department said.

"AI, the semiconductors that power it and the model weight are, as we all know, a dual-use technology," U.S. Secretary of Commerce Gina Raimondo told reporters. She cited concerns that AI could be used by adversaries for activities such as running nuclear simulations, developing bioweapons, and advancing military capabilities. The technology can also support powerful offensive cyberoperations and abet human rights abuses, including mass surveillance, the Commerce Department added.

Raimondo emphasized that the restrictions are narrowly targeted at national security concerns, with items such as gaming chips being exempt.

Ray Wang, a Washington-based analyst specializing in U.S.-China economic and technological competition, told Nikkei that the framework risks undermining the market potential of American chip companies. Wang also suggested that it would push China to accelerate its efforts to develop AI chips.

Chinese technology companies have been actively securing chipmaking supplies, including essential consumables, ahead of Donald Trump's return to the White House, Nikkei Asia reports.

In December, the Biden administration announced sweeping new export restrictions and added 140 entities—almost all Chinese—to a trade blacklist. The administration also launched a trade investigation into Chinese-built legacy chips, which could lead to punitive tariffs. The probe will not conclude before Trump, who has repeatedly threatened sweeping tariffs on China, takes office.

One senior administration official expressed hope that the incoming Trump administration would not delay the implementation of these new rules. "Time is really of the essence," the official said, noting that U.S. models were ahead of Chinese ones by six to 18 months. "Every minute counts."

Wang suggested that Trump'