CNBC’s Steve Kovach joins 'Power Lunch' to discuss why Microsoft is against AI chip export curbs.

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The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

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Microsoft has expressed opposition to the export curbs on AI chips, currently enforced by U.S. regulations. The technology giant is appealing to the U.S. administration to reconsider certain restrictions, with an aim to expand exports of advanced chips and AI models not just to any destination, but specifically to U.S. allies. This includes a list of countries like Israel, Greece, Poland, and Saudi Arabia, key allies who have been categorized in a tier that limits their access to top-tier AI technology.

The restrictions in question are part of regulatory measures introduced under the Biden administration, designed with national security interests in mind. These measures classify countries into different tiers, limiting advanced AI technology and chip access for certain nations, including some allies. Microsoft's contention is that these limitations could inadvertently disadvantage the U.S., as allies might turn to other sources like China for the same technology.

In promoting this policy change, Microsoft argues that a loosening of these restrictions would boost American jobs by fostering an environment where data centers are positioned globally but rely on U.S.-made equipment. While supporting the general aims of the export controls, Microsoft seeks an exemption for allies from the more stringent categorizations, ensuring these countries can access the same level of technology that is available in the U.S.



Microsoft's AI chip curb hurdles

International trade a hot topic again today. Not just on the terror front, Microsoft is pushing the Trump administration to loosen restrictions on exports of U.S. chips. Steve Kovach is here with the story. The rub to me, Steve, not to give it away, was this is not chips to China, this would be to our allies. Yeah, that's the whole thing that's going on here. So this was a blog post that Microsoft put out this morning from President Brad Smith asking President Trump to basically open up chip and A.I. model exports to our allies. This includes countries like Israel, Greece, Poland, Saudi Arabia, several more countries that we are allies with. And let me just talk a little bit about why Microsoft is doing this. We know they're building out data centers all over the world, and they say this is really about providing the best A.I. technology for their customers. They're making this argument here saying it's good for American jobs as well, because even if these data centers are built overseas, some of the equipment will be made here and then exported overseas to build those data centers. And right now, many countries are blocked from importing the best chips from NVIDIA and others or top A.I. models. It's not just about the chips, guys. It's also some parts of these A.I. models. And all of this was part of the diffusion rule put in place by the Biden administration in its final days back in January. It blocks export on those advanced chips and A.I. models for national security grounds. And they basically break it up into three tiers and pushing some of our allies into the second tier, meaning that they can't access the best technology. And by the way, Microsoft agrees with most of that diffusion order, but it says it's going too far pushing those allies into that second tier system. And the big ask here is just allow those allies to have the same access to the best artificial intelligence tech that we have. And by the way, this would also keep our China from kind of swooping in and saying, we'll provide it for you instead. That's part of it. This is the next this is the next kind of chapter in world hegemony, right? During the Cold War, it was the Soviets and the U.S. and then the satellite countries geographically around them. So why can't this be a situation where the U.S. benefits by saying, hey, let's have all of these people in our ecosystem as opposed to China's? Because we know China is definitely a rival. And this is U.S. companies building these data centers. We have Microsoft in this in this case, but of course, Amazon's looking all over the world. Matt is looking all over the world. I know Christine is going to get into this in a second, but those are all huge Nvidia customers too. So Nvidia has a benefit here as well. I was thinking that, you know, Microsoft's kind of going out there and taking, I don't want to say the fall, but willing to put their name on it. But it sounds like this is almost an effort that many companies could have undersigned. And that's the thing. And they just think this Biden regulation went just a little too far, saying these are our friends. And by the way, the last thing we want is China coming in, going to Poland or Saudi Arabia and say, hey, your allies over in the U.S., they're not going to offer you this technology. Let's offer it to you instead. And we're going to be the good guys here that will prevent.

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