America’s best tech asset |
It’s been two years since the Biden administration reshaped the global semiconductor market by barring China from buying the best US chips. Then, 12 months later, officials expanded the curbs to cover more technology and another 43 countries. The idea is to prevent China from using intermediaries in the Middle East, Africa or Asia to access chips that could lend Beijing a military edge. The effect, so far, has been to largely block chunks of the world from importing high-end processors at all.
Officials have for months been slow-walking approvals for Nvidia Corp. and others to ship silicon to data centers around the world as they debate what conditions to attach to those licenses. The long policy process has created some awkwardness: Five months after Microsoft Corp. announced a $1.5 billion investment in Abu Dhabi AI firm G42 — with Commerce Secretary Gina Raimondo’s blessing — a top company official said the US still needs to “get comfortable” with AI chip shipments to the United Arab Emirates and Kenya.
Vietnam, meanwhile, is one of eight countries selected for a US government initiative to bolster semiconductor supply chains. But it’s also on a list of countries that raise national security concerns around export controls, and therefore caught up in the license slowdown.
There are signs things could get moving soon. Last week, US officials unveiled a framework under which companies can seek preapproval for shipments to specific sites, contingent on both corporate commitments and security assurances from their national governments.
Those will be adjudicated on a case-by-case basis, but could include allowing US government inspections, limiting the computing power available to so-called entities and countries of concern, and barring employees from such places (read: China) from entering facilities.
“What the United States is saying now is: Don’t worry, the rest of the world, you will still be able to get advanced AI chips as long as the US government is OK with it,” said Geoffrey Gertz, a senior fellow at the Center for a New American Security and former Biden official. The question, Gertz said, is whether that provides comfort about eventual access or raises “more fears that the US government is going to put itself in the middle of every international transaction.”
Not everyone loves the idea of a preapproval process, as opposed to standard licensing for every shipment. Such arrangements have “repeatedly been exploited” by Beijing and “should be scrapped entirely,” said a spokesperson for House China Select Committee Republicans. “This move is especially perplexing in the Middle East, where we need tough monitoring and enforcement.”
The Biden administration’s calculus goes something like this: AI appetite is clearly global, and it’s better for the world to rely on American than Chinese technology. The world also wants to use American technology — and will jump through hoops to get it — which gives Washington leverage to, say, get G42 to divest from China.
But that leverage is only as strong as the US technological lead is long. Officials who worry that Huawei Technologies Co. could soon (or even just eventually) become a viable alternative to Nvidia generally want to ship American AI chips wider and faster. Those who are unconvinced by China’s claims of semiconductor progress, or skeptical of other countries’ promises to reduce ties with Beijing, think Washington should adopt a more restrictive approach and extract stronger commitments from governments seeking access to America’s best technological asset.
It’s a live debate with real consequences for companies. Microsoft has quickly learned that Raimondo’s positive view of its move into the UAE doesn’t necessarily translate to Capitol Hill or even other parts of the Biden administration. Export controls broadly introduce uncertainty around approval timelines, the chance of further crackdowns and the possibility that customers would choose — or develop — alternatives to avoid dealing with “burdensome conditions.”
At least, that’s what semiconductor startup Cerebras Systems Inc. is worried about, per the two full pages of export control-related risk factors detailed in its proposed initial public offering. Why the concern? Cerebras gets 87% of its revenue from G42.—Mackenzie Hawkins