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Biden's AI Export Limits Spark Nvidia Stock Drop Amid Industry Backlash

Jan 13, 2025, 07:37 PM

In the final days of his administration, President Joe Biden has announced sweeping new export controls on artificial intelligence (AI) chips, aiming to limit China's access to advanced AI technology and maintain U.S. technological leadership. The new "AI Diffusion" rule, unveiled by the U.S. Department of Commerce, imposes stringent restrictions on the global export of AI chips and requires companies to obtain government approval to export certain AI models and establish large AI computing facilities overseas. The tiered system for global AI chip distribution exempts 18 U.S. allies and partners, including Japan, Britain, and the Netherlands, granting them unrestricted access to advanced GPUs. Other countries face varying limits based on security credentials, with nations like China, Russia, North Korea, and Iran effectively barred from accessing advanced AI chips. Major tech companies have criticized the new regulations. Nvidia's stock dropped over 4%, reaching a three-month low and extending losses to 15% from last week's high. Nvidia publicly condemned the "AI Diffusion" rule, stating it will "stifle innovation and undermine America's global technology leadership." Oracle also criticized the regulations, calling them "one of the most destructive" to U.S. industry. Other chip stocks, including AMD and Broadcom, also saw declines. China responded by condemning the export controls, with the China Semiconductor Association calling them a "flagrant violation of international trade rules" and urging the global tech industry to resist the Biden administration's "technological hegemony." Amid these developments, President Biden signed an executive order directing federal agencies to accelerate the construction of AI data centers on federal land to bolster AI infrastructure in the U.S. The order imposes requirements and safeguards on developers building these facilities. Despite industry backlash, the Biden administration asserts that these measures are crucial for national security, aiming to prevent adversaries from accessing cutting-edge AI technology and to maintain America's leadership in AI innovation.