Washington tightens export licences for specific countries as it considers security risks to global AI development. Shares of U.S. semiconductor companies fell on Tuesday.
U.S. media Bloomberg disclosed on October 15, the Biden administration is discussing the major U.S. semiconductor companies, such as NVIDIA and AMD to set export restrictions, especially for the sale of artificial intelligence (AI) chips to certain countries, these restrictions will be mainly targeted at countries in the Middle East region, which have a demand for artificial intelligence data centres growing demand for AI data centres with strong financial backing.
Industry concerns and stock market reactions
According to the latest reports, this new policy will further tighten regulations on global AI development, especially in light of security risks. Initial export restrictions were primarily aimed at China, but the move is now likely to be extended to other countries. According to sources familiar with the matter, these discussions are still in the early stages, with no final decision yet reached and uncertainty. Considering that the Biden administration is in the final stages of its tenure, the introduction of a comprehensive new policy could encounter implementation challenges and could also affect U.S. foreign relations.
However, this policy has also triggered concerns in the industry. The top executives of the three major US chip giants – Intel, NVIDIA and Qualcomm – had warned that these export restrictions could undermine the US leadership in the global semiconductor industry. After the news was announced, NVIDIA’s shares fell 4.4 per cent, retreating from the record highs set in the previous trading session; other chip companies, including AMD, Intel, ARM, Broadcom and Micron, fell between 2.3 per cent and 6.2 per cent.

Middle Eastern countries’ AI needs and US strategic considerations
US President Joe Biden’s administration announced measures last year to expand the number of countries that need to apply for export licences to purchase advanced chips to more than 40, including some Middle Eastern countries that may transfer chips to China and are subject to US arms embargoes. However, the U.S. Department of Commerce announced new rules last month that are expected to ease the shipment of AI chips from companies such as Phaidon to data centres in the Middle East. According to this provision, data centres will be able to apply to become a Validated End User, you can receive chips under general authorisation, without the need to require U.S. suppliers to obtain individual shipment permits.
The U.S. Commerce Department’s Bureau of Industry and Security, which oversees exports, declined to comment on the reports, while companies such as NVIDIA, AMD and Intel did not respond to Bloomberg’s request for comment. The White House’s National Security Council declined to comment on the topic, but stressed that the US and the UAE recently issued a joint statement saying that the two countries are highly concerned about the challenges and risks of AI technology and that corresponding ‘safeguards are critical.’
The report noted that the new policies being considered by the Biden administration could cap the export of AI wafers to specific countries, thereby limiting the ability of some countries to develop AI. These measures would not only focus on China, but also extend to the Middle East, particularly to countries such as the UAE and Saudi Arabia, which are actively investing in AI data centres and see the US as a key partner.
Middle Eastern countries have a growing need for advanced AI technology aimed at diversifying their economies and reducing their dependence on oil. This makes U.S. AI chips an integral part of these countries’ development plans. Nonetheless, the Biden administration is concerned that these chips could be resold to China, thereby threatening U.S. technological superiority. As a result, the U.S. government has gradually tightened its regulations on the export of AI chips to Middle Eastern countries. However, NVIDIA CEO Jen-Hsun Huang has said that although the US government’s measures are affecting the company’s international business, NVIDIA still believes that the importance of the Chinese market cannot be ignored.
In addition, as the U.S. becomes more stringent in exporting AI wafers to the Middle East and elsewhere, these restrictions have prompted China to accelerate the development of its own semiconductor technology. Although China’s AI wafers are still lagging behind advanced U.S. technology, U.S. officials are concerned that if Huawei or other Chinese companies are able to successfully develop alternatives that are comparable to U.S. wafers, it will undermine U.S. dominance in the global AI field.
Some U.S. officials are understood to be considering export licences for AI wafers as a means of achieving diplomatic objectives. These diplomatic objectives include requiring key US-related companies to reduce their business dealings with China in exchange for licences to use US technology. Earlier this year, for example, the UAE’s G42 AI company entered into a co-operation agreement with the US-based Microsoft and was met behind the scenes with demands from the US to terminate its operations in China.