Is the Biden administration computer illiterate? Is it technology-innovation-unaware? Is it malicious when it comes to Israel? The third seems to be the case.
On its way out, the administration’s “Interim Final Rule on Artificial Intelligence Diffusion,” announced on Jan. 13, would place new limits on how many artificial-intelligence chips companies, including Nvidia, Intel and AMD, can send to different countries without making special arrangements with the U.S. government. Israel is one of the countries for which they will have to get permission.
Nvidia will be impacted the most, given that it produces an estimated 90% of the world’s AI chips. Stephen Bryen, a technology specialist (full disclosure: also my husband), adds: “Nvidia owns significant properties in Israel including Run:ai, an Israeli startup that has built software to help developers and businesses manage complex AI workloads and computing resources on a single platform.”
Nvidia’s second-largest development center outside of the United States is in Israel, with 3,300 employees, including residents of the West Bank and Gaza, representing 13% of its global workforce. Nvidia recommitted to its Israel operation in March.
Regarding Intel, Bryen points out that it is one of the largest employers in Israel’s high-tech industry, and one of its major development centers is in Israel, accounting for much of what Intel designs. “Years ago, the co-founder of Intel told me that his investment in Israel had turned out brilliantly. In addition, Israel’s NeuReality is slashing the high hardware costs and energy consumption required for AI processing. It has partnership agreements with IBM, AMD and other computing powerhouses and is set to transform the AI landscape.”
So, Israel needs special U.S. government permission to use what it works to develop and build?
No, actually. There is fraud in this. And the fraud is uglier for appearing to have no lasting, political or security rationale.
The new rules are meant to keep advanced chips and AI models under the control of the United States and its allies, a worthwhile objective. But the president-elect will have the final decision on whether to enforce them. And regardless, the rule doesn’t take effect for 120 days. It is unlikely that the “Interim Final Rule on Artificial Intelligence Diffusion” will be applied.
So, why do it?
To “put Israel in its place.”
First, there are friends/allies. The list of countries to whom the rule will not be applied includes Australia, Belgium, Canada, Denmark, Finland, Germany, France, French Guiana, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, South Korea, Spain, Sweden, Taiwan and the United Kingdom.
Then there are the adversaries, including China and Russia, which are already subject to existing semiconductor trade restrictions. There are others.
And, finally, there is a sort of lumpy category into which Israel has been placed. This includes the United Arab Emirates, Saudi Arabia, Egypt and Eastern European countries, including Poland, Romania, Hungary, and Mexico and countries in Latin America. According to Bloomberg, there will be a quota of 50,000 advanced graphics processors over three years for these countries, from 2025 to 2027. According to the Biden administration, Israel is not a security ally, tech ally, democratic ally or any other kind of ally. They say it is Peru.
To repeat, this appears to be theater. Played right by the incoming administration, it will likely be an aggravation rather than a serious blow to Israel’s security or economic future. And, it should also be said that, while following in the ignominious footsteps of his political mentor, Barak Obama, Joe Biden probably did less damage.
The Obama administration showed Israel the sole of its shoe by declining to veto U.N. Security Council Resolution 2334, which called for “an immediate halt to all Israeli settlement construction in the West Bank and East Jerusalem.” It further demanded that countries “distinguish, in their relevant dealings, between the territory of the State of Israel and the territories occupied since 1967.”
Israel was concerned that the language would lead to a surge in BDS efforts, destructive of its economy. But Israel’s growth rate in 2017 was 4.39%. With negative growth only in 2020—the year of the COVID pandemic—Israel’s growth has been positive, even after the terror attacks on Oct. 7, 2023.
High-tech investment in Israel by American and other Western companies has been the backbone of much of Israel’s economic growth. Nvidia’s Run:ai deal, completed in April 2024, is worth between $600 and $700 million. And Israeli innovation is used by the United States in a variety of way—for defense, for medicine, for education, for games.
In July, Nvidia, Pfizer and Thermo Fisher invested in Israel’s CytoReason, which uses AI to develop disease models. Funding could reach $110 million. “The rapid expansion of new technologies, like artificial intelligence, holds tremendous potential to help transform what is possible in human health,” said Pfizer’s chief scientific officer.
It could, unless, like the outgoing Biden administration, you find nasty theater to be of greater interest.
