US Senate passes bill to force AI chipmakers to prioritize sales to American companies – House of Representatives now expected to amend or pass the legislation

The U.S. Senate just passed the “GAIN AI” bill as part of the National Defense Authorization Act (NDAA), which requires AI chipmakers like Nvidia and AMD to prioritize chip orders for U.S. companies over export orders, particularly to China and its allies. As reported Bloombergthe bipartisan bill easily passed the Senate and is now being considered by the House.

“The Senate took action today to ensure that American customers – including small businesses and startups – are not forced to wait in line behind Chinese tech giants when purchasing the latest AI chips,” Senator Elizabeth Warren (D-MA), who co-sponsored the bill, said in a statement. Senator Jim Bank (R-IN), a lead co-sponsor of the bill, also noted that the bill would enhance U.S. competitiveness in artificial intelligence and other cutting-edge industries while limiting exports to U.S. rivals, particularly China.

The House of Representatives has already passed its version of the NDAA, but it lacks a provision stating that chipmakers must postpone exports in favor of local sales. Because of this, both houses must now work together to reach a compromise, but whether the rule will make it into the final version that will be signed by the president is still up for debate.

Nvidia has always criticized the law, saying its global sales “do not deprive American customers of anything” and that the logic behind it “is based on doomsday science fiction.” The company also said it was “trying to solve a problem that doesn’t exist” and that it would “reduce worldwide competition in every industry that uses popular computer chips.” Nvidia has stated that H20 shipments do not affect shipments of H100, H200 and Blackwell chips, which makes sense since they all operate different parts and the shipment of one will not affect the shipment of the other.

Although China is Nvidia’s largest market next to the United States, sales in the country are still diminutive in comparison. The United States accounts for almost half of Nvidia’s sales in fiscal 2024, while China only accounts for 13% of its total revenue. Moreover, this number may decline in the near future due to the ongoing trade war between Washington and Beijing, especially since the latter has banned its largest technology companies from purchasing Nvidia’s latest chips.

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