The most potent criticism of the U.S. chip controls wasn't flawed strategy, but the chronic underfunding and limited capacity of agencies like the Bureau of Industry and Security (BIS) to effectively enforce complex export bans against determined adversaries.
Related Insights
Evaluating export controls by asking if China is still advancing is the wrong metric. The true test is the counterfactual: where would China be *without* the restrictions? The controls act as a significant handicap in a competitive race, not a complete stop, and it's highly likely China would be ahead of the U.S. in AI without them.
It's a common error to conflate the CHIPS Act and the October 2022 chip controls. The CHIPS Act was a legislative effort for domestic manufacturing resilience. The executive export controls were a separate national security policy focused on denying China access to high-end compute for military applications.
The US government revived the name "Operation Gatekeeper," once used for a 90s border project, for a new mission: cracking down on illegal AI chip smuggling to China. This demonstrates how semiconductors have become a national security priority on par with physical border control.
The most dangerous policy mistake would be reverting to a 'sliding scale' that allows China to buy chips that are a few generations behind the cutting edge. In the current era of AI, performance is aggregatable. China could simply purchase massive quantities of these slightly older chips to achieve compute power equivalent to frontier systems.
Restricting allies like the UAE from buying U.S. AI chips is a counterproductive policy. It doesn't deny them access to AI; it pushes them to purchase Chinese alternatives like Huawei. This strategy inadvertently builds up China's market share and creates a global technology ecosystem centered around a key U.S. competitor.
A small team in the Biden White House successfully implemented crucial export controls on semiconductor technology before ChatGPT's release made AI a mainstream obsession, allowing them to act proactively rather than reactively.
Limiting chip exports to certain nations will force them to develop their own parallel hardware and software. This bifurcation creates a new global competitor and risks making the West's technology stack obsolete if the rival ecosystem becomes dominant.
Contrary to their intent, U.S. export controls on AI chips have backfired. Instead of crippling China's AI development, the restrictions provided the necessary incentive for China to aggressively invest in and accelerate its own semiconductor industry, potentially eroding the U.S.'s long-term competitive advantage.
The U.S. government identified a critical loophole allowing Huawei to acquire advanced High Bandwidth Memory (HBM) but waited nearly a year to close it. This bureaucratic delay, from February to December 2024, provided a significant window for China to stockpile essential components, undermining the broader export control strategy.
U.S. export controls on advanced semiconductors, intended to slow China, have instead galvanized its domestic industry. The restrictions accelerated China's existing push for self-sufficiency, forcing local companies to innovate with less advanced chips and develop their own GPU and manufacturing capabilities, diminishing the policy's long-term effectiveness.
