Microsoft has cautioned the US government that its restrictions on semiconductor exports could prove to be a “strategic misstep” in the escalating global competition for artificial intelligence supremacy. The tech giant fears that these curbs might inadvertently drive US allies toward Chinese-made chips.
In a blog post, Microsoft President Brad Smith argued that the restrictions, designed to limit China’s access to cutting-edge technology crucial for AI, are being exploited by Beijing. Smith wrote that China “is willing to provide what they need,” effectively undermining the US’s role as a reliable technology partner.
Under the Biden administration’s AI Diffusion Rule, even countries allied with the US, such as Switzerland, Singapore, and the UAE, face limitations on purchasing advanced chips. This has forced these nations to seek alternative sources for the components needed to build their AI infrastructure, Smith explained.
This warning comes amidst reports that the Trump administration is considering even stricter export controls, according to Bloomberg.
Experts suggest that the demand for computing power is increasing exponentially. Consequently, Washington faces a dilemma as both US and international companies strive to expand their operations globally. Not every jurisdiction favorable to AI development aligns with US interests or is shielded from China. A trade expert at the Center for Strategic and International Studies noted that countries barred from buying the necessary chips might resent US limitations, potentially leading them to reduce their reliance on Washington in favor of China.
Furthermore, international manufacturers of advanced chips might seize this opportunity. A tech expert writing for the Brookings Institution observed that these manufacturers are likely to eagerly expand their market share at the expense of the US, in response to the increased demand.
Washington’s restrictions on Beijing’s access to chips may have the unintended consequence of accelerating China’s self-reliance and its rise as a significant exporter. Technology writer Ben Thompson posits that the first strategic move for the US should be “let[ting] Chinese companies buy top-of-the-line Nvidia chips.”
Some analysts point to the progress of Chinese startup DeepSeek as evidence that the US controls are ineffective, perhaps even “counterproductive,” as reported by the South China Morning Post. However, the situation is more complex. A tech analyst told The New York Times that DeepSeek had spent years stockpiling Nvidia chips before the restrictions took effect, suggesting that a more proactive approach by the Biden administration might have yielded different results.
