According to informed sources, U.S. government officials have discussed limiting the sale of advanced AI chips from Nvidia (NVDA.US) and other American companies to specific countries, a move that would restrict the AI capabilities of certain nations.

The new approach would set export license caps for certain countries based on national security interests, the sources said. Officials are concerned about Persian Gulf countries, which have shown increasing interest in AI data centers and are well-funded.

The deliberation is still in its early stages and uncertain, but the idea has gained support in recent weeks. The policy would be built on a new framework to simplify the licensing process for shipping AI chips to data centers in places like the United Arab Emirates and Saudi Arabia. Commerce Department officials announced these regulations last month and indicated that more would be forthcoming.

Nvidia's stock fell more than 1% in pre-market trading on Tuesday after hitting a record close on Monday.

Advertisement

A spokesperson for the White House National Security Council declined to comment on the discussions but referred to the recent joint statement by the U.S. and the UAE on artificial intelligence. In the statement, the two countries acknowledged the "enormous potential of AI" and the "vitality of challenges and risks of this emerging technology and safeguards."

Nvidia CEO Jensen Huang stated that governments around the world are pursuing what is known as autonomous AI, the ability to build and operate their own AI systems, which has become a major driver of demand for advanced processors. Nvidia's chips are the gold standard for data center operators, making the company the world's most valuable chipmaker and the biggest beneficiary of the AI boom.

Some U.S. officials believe that this is just a remote possibility, and given the current negotiating positions, the U.S. government should impose stricter restrictions on global AI chip exports. Others warn against making it difficult for other countries to purchase American technology, as China might make progress and capture these customers.

While officials have been debating the best course of action, they have slowed down the issuance of licenses for large quantities of AI chips to the Middle East and other regions. However, there are signs that things may start to progress soon: under new regulations for data center shipments, U.S. officials will review and pre-approve specific customers based on the security commitments of the companies and their national governments, paving the way for easier licensing in the future.