Outgoing President Joe Biden dealt a blow to Israel by including it in a new presidential order that restricts the global distribution of advanced graphics processors, to keep them from falling into the hands of China and Russia. The move is intended to maintain the US’s 6- to 18-month lead in AI development over China.
A week before leaving the White House, Biden signed the Interim Final Rule on Artificial Intelligence Diffusion (AI Diffusion Rule), which places Israel on a list of countries facing restrictions on importing graphics processors produced by companies like Nvidia, Intel, and AMD.
This decision comes despite the fact that some of these companies develop their graphics chips in Israel.
The proposed regulations have raised concerns among chip industry leaders, who argue that the rules would restrict access to chips currently used in video games and impose limitations on the export of chips used for data centers and AI applications in 120 countries. Nations such as Israel, Mexico, Portugal, and Switzerland could face restricted access.
Chipmaker Nvidia criticized the proposal, calling it “misguided” and warning that it could hinder global innovation and economic growth.
On Wednesday, Nvidia, one of the three most valuable companies globally, announced its plans to build a massive server farm in Israel. The facility will be located in the new Mevo Carmel Science and Industrial park located at the northern end of Highway 6. Estimates suggest Nvidia will invest over half a billion dollars in the construction.
Earlier this week, Nvidia released the following angry statement, among other things ushering in the new Trump administration and rebuking the Biden folks:
The first Trump Administration laid the foundation for America’s current strength and success in AI, fostering an environment where U.S. industry could compete and win on merit without compromising national security. As a result, mainstream AI has become an integral part of every new application, driving economic growth, promoting U.S. interests, and ensuring American leadership in cutting-edge technology.
Today, companies, startups, and universities around the world are tapping mainstream AI to advance healthcare, agriculture, manufacturing, education, and countless other fields, driving economic growth and unlocking the potential of nations. Built on American technology, the adoption of AI around the world fuels growth and opportunity for industries at home and abroad.
That global progress is now in jeopardy. The Biden Administration now seeks to restrict access to mainstream computing applications with its unprecedented and misguided “AI Diffusion” rule, which threatens to derail innovation and economic growth worldwide.
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.
While cloaked in the guise of an “anti-China” measure, these rules would do nothing to enhance U.S. security. The new rules would control technology worldwide, including technology that is already widely available in mainstream gaming PCs and consumer hardware. Rather than mitigate any threat, the new Biden rules would only weaken America’s global competitiveness, undermining the innovation that has kept the U.S. ahead.
Meanwhile, until the new regulations are revoked by the incoming administration, Israeli companies and institutions will face significant delays in obtaining a license from the US Department of Commerce. This bureaucratic bottleneck is expected to hinder the import of advanced graphics chips to Israel, a major setback for the growth of the country’s artificial intelligence sector at a crucial time.
Moreover, Israel’s placement on the list of suspect nations means there will be strict limits on the number of chips allowed for import. An annual quota of 50,000 chips will be in place for the years 2025 to 2027. However, companies in this category that hold special National Verified End User status will be able to purchase up to 320,000 chips over a two-year period.
