WASHINGTON >> The Biden administration on Monday proposed new rules for the exporting of the advanced computer chips used to develop artificial intelligence, an attempt to balance national security concerns about the technology with the economic interests of producers and other countries.

But the rules also raised concerns of chip industry executives as well as officials the European Union over export restrictions that would affect 120 countries. Mexico, Portugal, Israel and Switzerland are among the nations that could have limited access to chips needed for AI data centers and products, though much of the underlying focus is aimed at China.

“If it’s China and not the United States determining the future of AI on the planet, I think that the stakes of that are just profound,” said White House national security adviser Jake Sullivan on Monday.

With just a week before President-elect Donald Trump takes office, Biden officials made clear it would be up to Trump to follow through with or drop an approach that Sullivan said “shouldn’t be a partisan issue at all.”

Commerce Secretary Gina Raimondo said that it’s “critical” to preserve America’s leadership in AI and the development of AI-related computer chips. Fast-evolving AI technology enables computers to produce novels, make scientific research breakthroughs, automate driving and foster a range of other transformations that could reshape economies and warfare.

Industry pushback

A tech industry group, the Information Technology Industry Council, warned Raimondo in a letter last week that a hastily implemented new rule could fragment global supply chains and put U.S. companies at a disadvantage. Another group, the Semiconductor Industry Association, said Monday it was disappointed that the policy was being “rushed out the door” before a presidential transition.

“The new rule risks causing unintended and lasting damage to America’s economy and global competitiveness in semiconductors and AI by ceding strategic markets to our competitors,” said SIA President and CEO John Neuffer.

Market reaction

Among those expected to be affected was the China-based data center developer GDS Holdings. Its stock dropped more than 18% Monday.

Because the framework includes a 120-day comment period, the incoming Republican administration could ultimately determine the rules for the sales abroad of advanced computer chips designed mostly by California companies like Nvidia and AMD. Nvidia shares dropped 2% and AMD’s were down 1.1% on Monday.

Government officials said they felt the need to act quickly in hopes of preserving what is perceived to be America’s six- to 18-month advantage on AI over rivals such as China, a head start that could easily erode if competitors were able to stockpile the chips and make further gains.

Ned Finkle, vice president of external affairs at Nvidia, said in a statement that the prior Trump administration had helped create the foundation for AI’s development and that the proposed framework would hurt innovation without achieving the stated national security goals.

“While cloaked in the guise of an ‘anti-China’ measure, these rules would do nothing to enhance U.S. security,” he said. “The new rules would control technology worldwide, including technology that is already widely available in mainstream gaming PCs and consumer hardware.”