RPT-BREAKINGVIEWS-US chip export plan is faux-win-win

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Gabriel Rubin

WASHINGTON, March 16 (Reuters Breakingviews) - The Trump administration wants to have its chips and sell them, too. The U.S. government has, for years now, tried to weigh restricting geopolitical rivals' access to advanced silicon with promoting domestic business interests. A new draft export regulation framework, as Reuters reported, would opt for an ad-hoc, transactional approach. The disconnect is jarring: if the artificial intelligence race is as important as officials claim, Uncle Sam may be about to offer a critical leg-up to the highest bidder.

Last year, the U.S. Commerce Department dropped Biden-era regulations that restricted AI infrastructure exports to countries based on a tiering system. A new case-by-case framework would allow significantly more discretion in deciding which countries get advanced chips. This would be a powerful tool in trade talks, particularly as a way to extract promises of investment in the United States. Apparent discord within the government lays bare the security and trade tensions: a draft of the proposal was withdrawn after being sent for inter-agency feedback, Reuters reported Friday.

A review of Chinese tech firms' December purchases of Nvidia’s NVDA.O second-most-powerful chips is a test of the protocols, while a sale to Saudi Arabia involved government security guarantees. The new rules may require foreign nations to invest in U.S. data centers as a condition for granting exports of 200,000 chips or more, among other rules.

It’s uncertain how any promises would be vetted. Touted trade-deal figures have been as vague as they are eye-popping. Take Taiwan, which pledged $250 billion in investments, but which includes $100 billion already committed by chip-maker Taiwan Semiconductor Manufacturing, with the rest for companies to individually decide. And since the administration already extracted a promised 15% cut of certain Nvidia and AMD AMD.O sales to China, the possibility rises that it could collect a toll from both sides of transactions.

If restricting access is a worthy goal, then a global approach is necessary: TikTok owner ByteDance is gaining access to Nvidia chips by working with companies outside of China, the Wall Street Journal reported. Doing so while maintaining export access for Nvidia and AMD, the bedrocks of U.S. chip dominance, really is important: last year, customers based outside of the country accounted for 31% and 67% of their revenue, respectively.

Yet a deal-by-deal framework risks rending holes in any worldwide regulatory dragnet. AI labs like Anthropic already claim that firms abroad can harvest enough data on their models to catch up in key regards; if true, computing power becomes the crucial bottleneck. The risk is that, in pursuit of trade victories, America's tech moat empties out.

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CONTEXT NEWS

U.S. officials are debating a ​new regulatory framework for exporting artificial intelligence chips and are considering requiring foreign nations to invest in domestic data centers or offer security guarantees as a condition for granting exports of 200,000 chips or more, Reuters reported. The rules are not yet final and could change.

(Editing by Jonathan Guilford; Production by Maya Nandhini)

((For previous columns by the author, Reuters customers can click on RUBIN/gabriel.rubin@thomsonreuters.com))