Breaking News: The U.S. Issues Its First Global AI Export Ban! NVIDIA and AMD Affected, Strict Limitations Imposed Globally

he first-ever global AI export control regulation in U.S. history has officially been announced! As one of his final major acts before leaving office, President Biden has introduced a sweeping chip ban, dividing the globe into three regulatory tiers with restrictions on AI chip exports.

Overview of the New Rules

Last week, reports hinted that the Biden administration was preparing a final push to solidify its AI regulatory framework. On January 13th, the Biden administration unveiled comprehensive regulations, marking the arrival of the first global AI export control system.

The new rules are aimed at placing transformative AI technology under the control of the U.S. and its allies while restricting advancements in countries like China. This framework provides a roadmap for managing how AI chips and models are shared abroad, shaping the trajectory of AI's global spread in the coming years.

Furthermore, the U.S. is expected to issue more regulations related to AI and chips, including policies promoting domestic energy production for data centers and blocking advanced chip exports to China.

Three-Tiered Global Chip Control System

Tier 1: U.S. Allies (Unrestricted Access with Conditions) Tier 1 includes the U.S. and 18 allied countries: Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, South Korea, Spain, Sweden, Taiwan, and the United Kingdom.

• Companies in these countries can deploy compute power freely, but must comply with specific security requirements.
• U.S.-based companies must ensure at least 50% of their compute power remains in the U.S., and no more than 25% is deployed outside Tier 1 countries.

Tier 2: Moderate Restrictions Tier 2 includes most global regions, such as Eastern Europe, the Middle East, and Latin America.

• Countries face a limit on total processing power (TPP), with an upper cap of 79 million TPP (equivalent to 50,000 H100 GPUs) from 2025 to 2027.
• Special NVEU certifications allow countries to access up to 5,064 million TPP (about 320,000 GPUs).
• These restrictions ensure AI clusters remain at least one generation behind the U.S.

Tier 3: Full Export Ban Tier 3 includes 24 countries and regions under U.S. arms embargoes, such as China and Russia. AI chips and data center technologies are strictly prohibited from export to these regions.

New Controls on AI Models and Data Centers

Model Parameter Restrictions:

• Deployment of high-performance proprietary models is banned in Tier 3 countries.
• Tier 2 countries may only deploy models that meet strict U.S. security standards.
• Open-source models and proprietary models with performance below current open-source benchmarks are exempt.

Special Data Center Certification: Companies like Microsoft and Google can apply for government certification, allowing more freedom in global AI processor trading. However, 75% of their AI compute power must remain in Tier 1 countries, with no more than 7% deployed in any other single country.

Exceptions:

• Purchases of fewer than 1,700 H100 GPUs are exempt from caps and licensing requirements.
• Exceptions are also provided for universities, medical institutions, and low-risk orders like gaming GPUs.

Strategic Objectives and Global Response

The overarching goal of these regulations is to ensure the most advanced AI infrastructure and models remain under U.S. or allied control. This move comes as regions like the Middle East invest heavily in becoming AI development hubs.

Despite bipartisan support in the U.S., the new rules have faced criticism from certain allies and industry leaders:

• The European Commission expressed concerns, calling the restrictions on EU nations "unjustified."
• NVIDIA and other tech companies criticized the regulations as stifling innovation and competitiveness.
• Industry associations labeled the rushed rollout as "disruptive" and harmful to global innovation.

NVIDIA's VP of Government Affairs stated:

"These unprecedented restrictions will weaken global innovation and economic growth, harming U.S. competitiveness."

Impact on the Market

The immediate impact of these policies has already been felt:

• NVIDIA’s stock dropped by 5%, AMD fell by 1%, and major cloud providers (Microsoft, Amazon, Google) also saw slight declines.

While the full effects remain to be seen, these regulations will undoubtedly reshape global AI development and supply chains in the years to come.