The United States Senate has recently approved the 'GAIN AI' legislation as part of the National Defense Authorization Act (NDAA), which would mandate AI chip manufacturers like Nvidia and AMD to prioritize chip orders from American companies over exports, especially to China and its allies. According to Bloomberg, the bipartisan bill passed the Senate with ease and is now being reviewed by the House. “Today, the Senate took action to ensure American customers — including small businesses and startups — aren’t forced to wait behind China’s tech giants when buying the latest AI chips, ” said Senator Elizabeth Warren (D-MA), a co-sponsor of the bill, in a statement. Senator Jim Bank (R-IN), the lead co-sponsor, emphasized that the legislation will strengthen U. S. competitiveness in AI and other advanced sectors while curbing exports to U. S. rivals, notably China. The House of Representatives has passed its own version of the NDAA, but it lacks the provision requiring chipmakers to prioritize domestic sales over exports.

Consequently, both chambers must collaborate to reach a compromise, and it remains uncertain if this rule will be included in the final bill signed by the president. Nvidia has consistently opposed the bill, arguing that its worldwide sales “do not deprive U. S. customers of anything” and labeling the bill’s rationale as “based on doomer science fiction. ” The company contended that the legislation is “trying to solve a problem that does not exist” and would “restrict competition globally in any industry using mainstream computing chips. ” Nvidia further explained that shipments of its H20 chips do not impact the supply of H100, H200, or Blackwell chips, as these use different components, so the availability of one does not affect the others. While China is Nvidia’s second-largest market after the U. S. , sales there remain significantly smaller. The United States represents nearly half of Nvidia’s sales for fiscal year 2024, whereas China accounts for just 13% of total revenue. Moreover, this figure may decline due to the ongoing trade tensions between Washington and Beijing, especially since China has banned its major tech firms from purchasing Nvidia’s latest chips.