On January 13, the Biden Administration announced new rules aimed at tightening control over AI chip exports, marking a decisive step to strengthen U.S. leadership in advanced technology. Effective immediately, the policy, outlined in the Interim Final Rule on Artificial Intelligence Diffusion, introduces stricter export guidelines to ensure that cutting-edge AI technologies remain aligned with U.S. security interests.
For more information on the Interim Final Rule on Artificial Intelligence Diffusion and its potential impact on your organization, please contact our Partner, Fiona Xu, at contact@consultils.com.
Key Elements of the Rule
1. Unlimited Access for Trusted Nations
The rule designates 18 countries as trusted allies, including Canada, Japan, Republic of Korea, Taiwan, and some European counties. These nations face no new restrictions on acquiring U.S. developed AI chips or technology, reflecting strong alignment with U.S. national security and technological goals.
2. Verified End User Designations for Trusted Entities
Two trust-based classifications offer expanded access for eligible institutions:
Universal Verified End User (UVEU): Allows trusted institutions in close ally nations to allocate up to 7% of their global AI computational capacity abroad, enabling global collaboration while prioritizing domestic leadership in advanced AI development.
National Verified End User (NVEU): Enables organizations in non-adversarial nations to purchase up to 320,000 GPUs over two years, under strict compliance with U.S. security and trust requirements.
3. Controlled Access for Other Countries
Organizations in non-verified nations can access up to 50,000 GPUs per country, ensuring essential sectors like healthcare and government services can still benefit from U.S. technology while minimizing risks.
4. Government Incentives for Collaboration
Nations that align their renewable energy and security policies with U.S. objectives can double their chip caps to 100,000 GPUs, fostering deeper partnerships based on shared values and technological goals.
5. Streamlined Approvals for Low-Risk Institutions
Orders equivalent to 1,700 advanced GPUs—primarily for research and healthcare institutions—are exempt from licensing. This ensures that universities and medical facilities can quickly access AI tools to drive scientific and medical advancements.
6. Blocking Access for Adversarial Nations
The rule imposes firm restrictions on AI chip exports to China, Russia, Iran, and North Korea, nations identified as adversarial to U.S. interests. These restrictions extend to both advanced chips and powerful AI models. This reflects the U.S. commitment to ensuring that cutting-edge technologies are not used to threaten global security, enhance military capabilities, or undermine democratic values.
Exemptions
The rule includes key exemptions and safeguards to ensure that innovation continues without unnecessary disruption:
Supply Chain Activities Exempt:Activities such as chip design, manufacturing, and storage remain unaffected, ensuring that supply chain operations can proceed without interruption.
Open-Source Models Unrestricted:Open-source AI models, like Meta’s Llama, are excluded from the rule. This encourages continued collaboration and democratization in AI research and development.
A Critical Juncture for Global Technology
The announcement comes at a pivotal moment. With President Biden’s term concluding, the rule takes effect immediately but includes a 120-day comment period, providing an opportunity for the incoming administration to refine its framework.
President-elect Donald Trump will face the challenge of balancing the economic opportunities tied to AI chip exports—amid soaring global demand from companies like Nvidia, AMD, and Intel—with the imperative to protect national security and the interests of U.S. allies.
For more details on how these changes could affect your organization and to ensure compliance with these new regulations, please contact our Partner, Fiona Xu, at contact@consultils.com for expert advice and support.
Disclaimer: The materials provided on this website are for general informational purposes only and do not, and are not intended to, constitute legal advice. You should not act or refrain from acting based on any information provided here. Please consult with your own legal counsel regarding your specific situation and legal questions.
Fiona Xu, Esq. is the Partner and Head of Transactions of ILS.
She has extensive experience supporting global and high-growth technology companies on compliance and business needs. Her practice focuses on regulatory compliance across different sectors, with a focus on sector-specific regulations for artificial intelligence (AI) and medical devices. She supports multinational corporations in establishing and maintaining U.S. operations, managing legal and compliance challenges in various areas such as Privacy, Export Control, and CFIUS issues.
Email: contact@consultils.com | Phone: 626-344-8949
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