The US Department of Commerce has implemented new restrictions on the export of advanced artificial intelligence (AI) processors to several Middle Eastern countries, substantially impacting US chipmakers AMD and Nvidia.

The restrictions require companies to obtain export licenses to ship their products to destinations like Saudi Arabia and the United Arab Emirates.

US Tightens AI Chip Exports to Middle East

The US Department of Commerce’s actions address national security concerns about the potential misuse of these high-performance chips. Officials fear that China could obtain the processors through resale or by using cloud services. This could enable the development of advanced military equipment or the training of sophisticated AI models.

These concerns have led to Middle Eastern countries being included in export restrictions that originally focused on China. In recent weeks, AMD and Nvidia have struggled to obtain approvals to export AI accelerators to the Middle East. The US government has slowed down license approvals, causing these difficulties. Officials are conducting a safety assessment on using AI chips overseas and trying to develop a strategy on the matter.

An AI accelerator is a type of hardware or computer system that helps speed up AI and machine learning applications, a sector currently led by Nvidia. The security review focuses on large sales of these chips to countries such as the UAE and Saudi Arabia.

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The US Department of Commerce states that they conduct thorough due diligence through an interagency process. They carefully process license applications from companies wishing to ship these advanced technologies to other countries. This revision has caused a slowdown in license applications in recent weeks, significantly affecting AI companies.

“With regards to the most cutting edge technologies, we conduct extensive due diligence through an interagency process, thoroughly reviewing license applications from applicants who intend to ship these advanced technologies around the world,” the Commerce Department’s announcement states.

The restrictions immediately impacted the stock market. AMD’s stock price stood at $162,65, a decline of 2.50%. Meanwhile, Nvidia also experienced a slight drop of 1.2% in Friday trading session. The US’s ongoing scrutiny of the global distribution of advanced technologies means the tech industry must navigate an increasingly complex regulatory environment.