U.S. Senate passes bill that forces AI chipmakers to prioritize sales to American companies — House now set to amend or pass legislation

The United States Senate has just passed the 'GAIN AI' legislation as part of the National Defense Authorization Act (NDAA), which would require AI chipmakers like Nvidia and AMD to prioritize chip orders for American companies over export orders, particularly to China and its allies. As reported by Bloomberg, the bipartisan bill sailed easily through the Senate and is now under consideration by the House.

“Today, the Senate acted to make sure American customers — including small businesses and startups —aren’t forced to wait in line behind China’s 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), who is the lead co-sponsor of the bill, also noted that this bill will bolster the U.S. competitiveness in AI and other cutting-edge industries while reducing exports to U.S. rivals, particularly China.

The House of Representatives has already passed its version of the NDAA, but the provision saying that chipmakers must put exports on the back burner in favor of local sales is missing. Because of this, the two chambers must now work together to create a compromise, but whether this rule will be part of the final version that will be signed by the president is still up for debate.

Nvidia has always criticized this bill, saying that its global sales “do not deprive U.S. customers of anything” and that the logic behind it was “based on doomer science fiction.” The company also said that it was “trying to solve a problem that does not exist” and that it would “restrict competition worldwide in any industry that uses mainstream computing chips.” Nvidia has said that its H20 shipments do not affect the supply of H100, H200, and Blackwell chips, which makes sense as these all use different parts, and that the supply of one will not affect the supply of the other.

Although China is Nvidia’s largest market next to the U.S., its China sales still dwarf in comparison. The United States accounts for nearly half of Nvidia’s sales in FY 2024, while China is only at 13% of its overall revenue. Aside from that, this might go down in the near future owing to the ongoing trade war between Washington and Beijing, especially as the latter has banned its biggest tech companies from acquiring Nvidia’s latest chips.

Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.