AI Chips Sell First in the US, NVIDIA Protests

The Department of Defense (or Department of War ) budget for fiscal year 2026, the National Defense Authorization Act (NDAA), is expected to be voted on by the Senate next week. A last-minute amendment could hurt NVIDIA financially, as it forces companies to sell AI chips in the United States first. This would essentially introduce new export restrictions.

Before leaving the White House, Joe Biden introduced the AI ​​Diffusion Rule , which allowed AI chips to be freely sold only to 18 allied countries. Other countries had to comply with specific rules, while sales were prohibited to China, Iran, North Korea, and Russia. The rules were revoked by the Trump administration in mid-May. NVIDIA has been able to export its H20 GPUs to China again since mid-July ( 15% of revenue must be paid to the government, but the agreement has not yet been formalized ).

An amendment to the NDAA, known as the GAIN Act (Guaranteeing Access and Innovation for National Artificial Intelligence Act), requires companies to prioritize orders from the United States for high-performance AI chips, including NVIDIA's H20 GPUs. This means U.S. customers must have a right of first refusal, sufficient chips must be available to meet local demand, and customers in other countries must not be undercut.

If approved, the amendment would once again prohibit the export of AI chips, effectively reintroducing the AI ​​Diffusion Rule and thus requiring a specific license from the Department of Commerce. According to NVIDIA, the GAIN Act is the product of left-wing paranoia propagated by so-called AI doomsayers . A spokesperson for the Californian company stated :

We never deprive American customers to serve the rest of the world. In an attempt to solve a problem that doesn't exist, the proposed bill would limit global competition in any industry that uses traditional computing chips.

After being allowed to export H20 GPUs to China, NVIDIA had made peace with the government. Now there's a risk of a new conflict that could void the agreement regarding the 15% sales tax.