Page 11 - The Indian Eye 071825

OPINION JULY 18, 2025 | The Indian Eye 11

requirements for a licensed import- delays in operationalizing microchip
er of the chips to report in case the processing plants, particularly in
chip is diverted to another location New Albany, Ohio, primarily due to
or used in another project than in- financial issues. Prior to the CHIPS
tended, or its security features are and Science Act, the company had
tampered with. The bill is currently undergone significant lay-offs, par-
under consideration of the Com- ticularly of US fabrication plant staff,
mittee on Foreign Affairs within the owing to financial issues.
House of Representatives. Notably, a The sanctioned CHIPS Act
similar bill, also called Chip Security grants (worth US$ 7.865 billion to-
Act, was introduced in the Senate by tal) for the company were, therefore,
Senator Tom Cotton (R-Arkansas) a important to shore up finances for
week prior to the one introduced in new projects. Yet, the grants began
the House of Representatives, and is disbursing only recently, pushing the
now under consideration of the Sen- project opening from 2025 to 2030 or
ate Committee on Banking, Hous- 2031.[18] It can be assumed that the
ing, and Urban Affairs. situation will only be exacerbated, if
Parallel to these new and ten- the grant requirements are tightened
tative steps towards regulation of There are talks of renegotiation of the conditions, or even cancellation, of grants given under further. Beyond this, companies may
export of capabilities that build AI, seek to diversify their manufacturing
the Trump administration has also the CHIPS and Science Act 2022 (File photo) lines to countries that provide favor-
sought to alter the Biden-Harris ap- able conditions, further hampering
proach towards nurturing domestic or report any diversion or risk to the di Arabia which allows NVIDIA a expansion within the US.
AI capabilities. This is visible in its hardware. sale of 18,000 of its advanced GPUs. In conclusion, the abrupt rescis-
antagonism towards the CHIPS and However, the new BIS guidelines and sion of the AI Diffusion Framework,
Science Act, 2022. IMPLICATIONS AND Chip Security Act requirements, with paired with new BIS guidelines and
Trump has been extreme- CONCLUSION their due diligence requirements, a performance-bound overhaul of
ly critical of the Act, arguing that End-User and End Use restrictions, CHIPS Act awards, marks a signif-
the companies dealing in high-end hile the removal of AI etc., may ultimately lead to an ‘oner- icant shift in US approach to AI
chip production and availing these diffusion framework may ous and uncertain process’. Ulti- policy. While US seems to be mov-
grants do not lack in funds to estab- Wstreamline the AI market mately, these changes will further ing from an export system based on
lish their production line in the US, and prevent international relations to increase compliance burdens and rigid, tiered-country-based quotas to
but required an ‘incentive’ for the be shadowed by quota requirements operational costs for all participants a monitoring and intelligence-based
same (referring to the grants in the for the US, the abrupt nature of re- (provided they are technically feasi- model, there is still a lot of uncertain-
CHIPS and Science Act). He had scission creates significant uncertain- ble in first place), which would make ty around the future policy direction.
earlier threatened to end the CHIPS ty about future regulatory direction. it costlier to import from the US. This uncertainty is accented by
and Science Act, and instead impose Given that a future policy has been Changes in grant from CHIPS the Trump administration’s decision
high tariffs on foreign manufacturing hinted during the announcement, and Science Act present their own to alter the terms of the incentives
of chips and semiconductors. More there may now exist a limbo in ap- set of challenges. Notably, without provided to companies through
recently, the Trump administration proach for both the US and their governmental support, the cost of CHIPS and Science Act. Although
has taken a more targeted approach potential importers of compute. It is establishing a chip manufacturing this approach seeks to prioritize na-
instead of cancelling the Act whole- also possible that while the new reg- unit in the US is 30 per cent costli- tional interest in export regulation,
sale, the grants provided under it are ulations may not institutionalize ti- er compared to the rest of the world, as well as sustain domestic innova-
being renegotiated with tighter terms er-based system, they will likely retain which made steps such as the CHIPS tion, it has introduced new compli-
and stronger performance demands. pre-conditions that effectively create and Science Act indubitably critical ance burdens and funding uncer-
Taken together, these actions trade spheres based on their relation- for semiconductor growth within the tainties that will affect not just the
denote three major trends. One, the ship with the US, the confidence the country. Yet, companies that have US itself, but the future of AI devel-
US is seeking to consolidate its lead- US may share on the country’s capa- committed substantial resources to opment globally.
ership in chip and semiconductor bility to regulate and monitor chip us- domestic production facilities based
industry, and by extension, AI devel- age, or US interest in keeping China on previous policy frameworks may Meghna Pradhan is a Research Analyst
opment, by enforcing strict perfor- at bay in areas of its geopolitical in- get hamstringed into achieving rapid at the Manohar Parrikar Institute for
mance-based industrial policy that terest and influence. In an attempt to returns on their investments. This is Defense Studies and Analysis,
anchors technology development shore up West Asian allies and ward problematic especially since a capi- New Delhi. She is currently pursuing
on American soil while maximizing off growing Chinese influence, for in- tal-heavy industry such as semicon- her PhD at the Department of East
private and public investment. Sec- stance, Trump announced a series of ductor and chip manufacturing often Asian Studies, University of Delhi,
ond, there is a push for plugging per- deals with the UAE and Saudi Ara- rely on long-term investment hori- with her thesis focused on how emerg-
ceived leakages that may enable the bia during his May 2025 tour of the zons and predictable regulatory en- ing technologies such as AI affect
countries US considers adversarial region, allowing them import of mas- vironments, which is antithetical to political processes
(particularly China) to gain leverage sive number of advanced AI chips policy flip-flops posed by the re-ne- Views expressed are of the author and
within its market, instead of creating (immediately after scrapping the AI gotiations and tariff threats. do not necessarily reflect the views of
country-based guardrails. Lastly, in- Diffusion Framework). Combined with the aforemen- the Manohar Parrikar IDSA or of the
stead of hedging against countries by Most companies including tioned newer requirements regard- Government of India.
blocking them behind a tier system, NVIDIA had openly expressed dis- ing installing monitoring provisions
the US seems to be pivoting to an in- satisfaction against the AI Diffusion within the chip, the costs are invari- This article first appeared in the
tel-driven model, wherein countries Framework, and have supported this ably going to be driven higher, which Comments section of the website (www.
may have relatively (and theoreti- repeal as it may open new markets at may lead to a slowdown in expansion idsa.in) of Manohar Parrikar Institute
cally) unfettered access to compute, a larger scale. This is evidenced by of manufacturing in the US. For in- for Defense Studies and Analyses, New
as long as steps are taken to prevent the AI deal between the US and Sau- stance, Intel has been facing project Delhi, on July 4, 2025

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