Delusional Senate Minority Leader Chuck Schumer (D-NY) just stood with Sen. Elizabeth Warren (D-MA) and demanded that President Donald Trump bring back one of former President Joe Biden’s most catastrophic failed policies: a blanket ban on AI-capable chip exports to China.
“We are calling on Trump to stand up for the nation’s security by once and for all blocking China’s access to our AI chips and manufacturing equipment,” Schumer said.
Schumer has this issue 100% wrong. And we know because it has already been tried.
The Biden administration thought the best way to keep China in check was to deny them access to most AI-capable American microchips, which backfired as China imposed a complementary import ban and pushed to build its own hardware and shut the United States out of global markets.
In May of this year, Huawei Chairman Xu Zhijun flaunted the failure of the Biden policy, saying: “If the United States hadn’t forced our country, our companies, and our industry, we wouldn’t have [expanded] like this. … But we are also grateful to the U.S. for enabling our country’s semiconductor industry chain to truly grow.”
Biden’s blanket export controls caused U.S. companies to surrender global market share.
It’s not just Huawei. Enflame raised roughly $912 million in a Shanghai initial public offering; its shares closed 179% higher on debut, at a valuation of approximately 171 billion yuan. Cambricon’s growth helped make founder Chen Tianshi one of the wealthiest technology entrepreneurs under 40, with a reported net worth of $22.5 billion.
Trump has taken a more nuanced and grounded tack, limiting the scope of export controls to only the most advanced chips (to maintain U.S. military superiority), while allowing sales of previous-generation chips for civilian artificial intelligence and other data center deployments. This has even helped Intel expand back into profitability.
We also know Schumer is wrong that U.S. chip exports would be “bending the knee to Xi” because China has banned imports. They don’t want American chips in their data centers because they know it would make them dependent on us, cede the critical standard-setting that’s key to global domination, and keep them a generation behind our cutting edge via more tailored export controls.
Advocates of new blanket export restrictions like Schumer are falsely portrayed as “hawkish” on China, but their professed policy actually accelerates China’s domestic AI and semiconductor ecosystem. It’s tough talk but counterproductive action.
The new global competition is between the burgeoning Chinese manufacturers and the Nvidia/AMD/Microsoft-centered American tech stack. The winning stack will dominate the markets not just for chips, but for servers, data centers, cloud platforms, networking, software tools, models, developers, and technical standards.
In Egypt, Huawei entered competition for government AI data centers, prompting a reported counterproposal from American companies.
In South Korea, Huawei announced an intended entry into the AI-accelerator market.
In Latin America, Huawei has explored an Ascend-based AI-as-a-service model; Brazil is already dividing AI investment between American and Chinese-linked initiatives.
To win this global race, America’s premier manufacturers and service providers should be allowed to sell all but the most advanced technologies (reserved for military application) globally. And the real way for Trump to take the fight to Chinese President Xi Jinping would be to demand he allow American chips back into Chinese data centers.
Restoring some market share there would keep China dependent on U.S. technology and standards. That would reinforce U.S. leadership and improve the ability of our companies to compete everywhere else by preventing standardization on Huawei platforms.
Congress should narrow its focus to tough enforcement against diversion and military end-use, while embracing the Trump administration position that prior-generation chips should not be subject to export bans. Any NDAA provision that would recreate a Bidenesque blanket, inflexible policy that locks America out of commercial markets should be rejected as contrary to American economic and national security interests.
America completely dominated internet and mobile phone technologies over the last 30 years and built trillion-dollar companies like Apple, Amazon, and Google with global customer bases.
We can do that with microchips and other cutting-edge technologies because America has the top scientists, engineers, financiers, and wizard-smart CEOs. The rest of the world has been playing catch-up.
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We can and should protect our military edge at the frontier while vigorously competing for the world’s commercial AI markets. We should all be very nervous if we let China seize the lead in AI.
Congress and Trump should be united against failed Biden-era policies that undermine these goals.
Stephen Moore is an economist and co-founder of the Committee to Unleash Prosperity. Phil Kerpen is president of American Commitment and principal at the Committee to Unleash Prosperity.
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[ H/T Washington Examiner ]
