Trump's AI Czar Downplays Chip Smuggling Risks, Warns of Over-Regulation as China Closes AI Gap

Trump's AI czar downplays risk AI chip exports could be smuggled

US President Donald Trump speaks during a the White House Crypto Summit in Washington, DC, March 7, 2025. White House AI czar David Sacks on Tuesday downplayed the risk that coveted American AI chips could be smuggled to bad actors, and expressed concern that regulating U.S. AI too tightly could stifle growth and cede the critical market to China. "We talk about these chips like they could be smuggled in the back of a briefcase. That's not what they look like. These are server racks that are eight feet tall and weigh two tons," Sacks said at the AWS summit in Washington. "They don't walk out doors. It's very easy to basically verify that they're where they're supposed to be," he said. The comments indicated President Donald Trump's approach to AI could be centered on expanding markets abroad for U.S. AI chips and models. Former President Joe Biden had emphasized policies that countered risks the chips could be diverted to China and used to bolster Beijing's military. "I do worry we're on a trajectory where fear could overtake opportunity and we end up sort of crippling this wonderful progress that we're seeing," Sacks said, citing a raft of bills in state legislatures seeking to regulate AI, as well as permitting challenges facing companies seeking to build the data centers that power AI. Trump rescinded Biden's executive order aimed at promoting competition, protecting consumers and ensuring AI was not used for misinformation. He also rescinded Biden's so-called AI diffusion rule, which capped the amount of American AI computing capacity that some countries were allowed to obtain via U.S. AI chip imports. "We rescinded that Biden diffusion rule, which...made diffusion a bad word. Diffusion of our technology should be a good word," Sacks said. The Trump administration and the United Arab Emirates also announced a plan last month for the Gulf country to build the largest artificial intelligence campus outside the U.S. after Biden in 2023 put in place rules that curbed most AI chip shipments to the region. Taking aim at that regulation, Sacks said, "What play are we giving them? We're basically going to push them into the arms of China." He added that if, in five years, AI chips made by sanctioned Chinese telecoms equipment giant Huawei were everywhere, "that means we lost...We can't let that happen." The need to remove hurdles to U.S. AI innovation is urgent as China has made important advances in its AI models, Sacks said. This year, the Chinese AI app DeepSeek shocked the world with its sophisticated, affordably trained model. "China is not years and years behind us in AI. Maybe they're three to six months," said Sacks. "It's a very close race." The White House later said he was referring to China's AI models, adding that Chinese AI chips are one to two years behind their U.S. counterparts.

Trump's AI czar echoes Jen-Hsun, says China's AI models are 'maybe three to six months' behind the US -- while also arguing for ever fewer AI regulations in the US

To say the White House is 'keen' for the USA to be at the forefront of all things AI on the global stage is perhaps a bit of an understatement. Arguably, it's been an AI feeding frenzy since day one of the current administration, and yet there are still calls for a further relaxing of AI regulation. Earlier this week at the AWS summit in Washington, Trump's AI czar David Sacks minimised the need for regulation of American-made AI chips amid fears they could be smuggled to bad actors (via Reuters). In response to a number of states' attempts to both regulate AI and challenge the building of new data centres, Sacks said, "I do worry we're on a trajectory where fear could overtake opportunity and we end up sort of crippling this wonderful progress that we're seeing." He also said, "We talk about these chips like they could be smuggled in the back of a briefcase. That's not what they look like. These are server racks that are eight feet tall and weigh two tons," going on to add, "They don't walk out doors. It's very easy to basically verify that they're where they're supposed to be." Mate, where there's a will, there's a way. For a little context, Biden's Executive Order 14110 was nixed on day one of Trump's second presidential term. This executive order had tried to introduce at least some guard rails around the development and use of AI. Then in May, the current administration also scrapped the 'AI Diffusion Rule,' which was an attempt to limit who outside of the US could get their hands on America's advanced semiconductors. Nvidia CEO Jensen Huang was not a fan of the rule. And now, David Sacks is echoing the sentiment of Huang's earlier words of displeasure, saying, "China is not years and years behind us in AI. Maybe they're three to six months. It's a very close race." The White House later clarified Sacks was referring to China's AI models, like DeepSeek, rather than their AI chips, but given Nvidia's recently announced plans to build more AI chips in the US, perhaps it's hardly surprising that Sacks is echoing the company's CEO here. The White House also claims China's AI chips are still years behind America's, but recent developments, such as Huawei's AI chips, have no doubt stoked the flames of this administration's anxiety. For just one more underscoring example, the Biden administration also previously attempted to curb the amount of American-made AI chips that were specifically going to the United Arab Emirates. Then last month, the Trump administration announced a plan for the UAE to build the largest artificial intelligence campus outside the US. In reference to this partnership and the earlier regulation, Sacks said, "What play are we giving them? We're basically going to push them into the arms of China."

Trump's AI czar downplays risk AI chip exports could be smuggled

Trump rescinded Biden's executive order aimed at promoting competition, protecting consumers and ensuring AI was not used for misinformation. He also rescinded Biden's so-called AI diffusion rule, which capped the amount of American AI computing capacity that some countries were allowed to obtain via US AI chip imports.White House AI czar David Sacks on Tuesday downplayed the risk that coveted American AI chips could be smuggled to bad actors, and expressed concern that regulating U.S. AI too tightly could stifle growth and cede the critical market to China. "We talk about these chips like they could be smuggled in the back of a briefcase. That's not what they look like. These are server racks that are eight feet tall and weigh two tons," Sacks said at the AWS summit in Washington. "They don't walk out doors. It's very easy to basically verify that they're where they're supposed to be," he said. The comments indicated President Donald Trump's approach to AI could be centered on expanding markets abroad for U.S. AI chips and models. Former President Joe Biden had emphasized policies that countered risks the chips could be diverted to China and used to bolster Beijing's military. "I do worry we're on a trajectory where fear could overtake opportunity and we end up sort of crippling this wonderful progress that we're seeing," Sacks said, citing a raft of bills in state legislatures seeking to regulate AI, as well as permitting challenges facing companies seeking to build the data centers that power AI. Trump rescinded Biden's executive order aimed at promoting competition, protecting consumers and ensuring AI was not used for misinformation. He also rescinded Biden's so-called AI diffusion rule, which capped the amount of American AI computing capacity that some countries were allowed to obtain via US AI chip imports. "We rescinded that Biden diffusion rule, which...made diffusion a bad word. Diffusion of our technology should be a good word," Sacks said. The Trump administration and the United Arab Emirates also announced a plan last month for the Gulf country to build the largest artificial intelligence campus outside the U.S. after Biden in 2023 put in place rules that curbed most AI chip shipments to the region. Taking aim at that regulation, Sacks said, "What play are we giving them? We're basically going to push them into the arms of China." He added that if, in five years, AI chips made by sanctioned Chinese telecoms equipment giant Huawei were everywhere, "that means we lost...We can't let that happen." The need to remove hurdles to U.S. AI innovation is urgent as China has made important advances in its AI models, Sacks said. This year, the Chinese AI app DeepSeek shocked the world with its sophisticated, affordably trained model. "China is not years and years behind us in AI. Maybe they're three to six months," said Sacks. "It's a very close race." The White House later said he was referring to China's AI models, adding that Chinese AI chips are one to two years behind their U.S. counterparts.

Trump's AI Czar David Sacks Dismisses AI Chip Smuggling Fears, Warns Over-Regulation Could Hand AI Dominance To China: 'We Talk About These Chips Like They Could Be Smuggled In The Back Of A Briefcase' - Alphabet (NASDAQ:GOOG), Amazon.com (NASDAQ:AMZN)

On Tuesday, David Sacks, the White House AI czar, downplayed concerns over AI chip smuggling, arguing that over-regulating U.S. AI exports could stifle innovation and allow China to gain a technological edge. What Happened: Speaking at the AWS summit in Washington, Sacks dismissed the idea that U.S. AI chips could be easily smuggled, noting that the chips are massive, weighing up to two tons and cannot be hidden, reported Reuters. "We talk about these chips like they could be smuggled in the back of a briefcase. That's not what they look like. These are server racks that are eight feet tall and weigh two tons," he said. Sacks, a key figure in the President Donald Trump administration's AI policy, expressed concern that overly restrictive regulations could impede U.S. technological progress. See Also: Nvidia's Jensen Huang Once Called Huawei China's Most Formidable Tech Company, But CEO Ren Zhengfei Says Its Chips Still Lag Behind US Rivals He argued that tightening controls might inadvertently push global markets toward China. "I do worry we're on a trajectory where fear could overtake opportunity and we end up sort of crippling this wonderful progress that we're seeing," Sacks warned. Why It's Important: The comments come as U.S.-China relations remain tense, particularly over AI technology. Sacks criticized the export restrictions on AI chips imposed during the former President Joe Biden era, which sought to prevent them from reaching China, fearing their use in military applications. He stated that such measures could backfire, pushing countries into China's arms. "We rescinded that Biden diffusion rule, which...made diffusion a bad word. Diffusion of our technology should be a good word, he said, highlighting the need for global cooperation on AI. Pre-IPO Offer: Get A Piece Of A Nearly $5T Global Opportunity By Joining BOXABL As An Early Shareholder At Just $0.80/Share Massive Demand & Disruptive Potential - Boxabl has received interest for over 190,000 homes, positioning itself as a major disruptor in the housing market. Revolutionary Manufacturing Approach - Inspired by Henry Ford's assembly line, Boxabl's foldable tiny homes are designed for high-efficiency production, making homeownership more accessible. Affordable Investment Opportunity - With homes priced at $60,000, Boxabl is raising $1 billion to scale production, offering investors a chance to own a stake in its growth. Share Price: $0.80 Min. Investment: $1,000 Valuation: $3.5B Click Here To Invest For Just $0.80/Share ($1000 Min) Last month, it was reported that the U.S. plans to implement a regulation aimed at confirming the origin of AI chips developed by Nvidia Corp NVDA and its competitors, to stop them from being illicitly transported to China. During the same time, Nvidia criticized AI startup Anthropic, backed by Amazon.com, Inc. AMZN and Alphabet Inc.'s GOOG GOOGL Google, for advocating stricter U.S. export controls on AI chips to China. The clash followed a blog post by Anthropic stating that chips had been smuggled into China using methods like hiding them in "prosthetic baby bumps" and with "live lobsters." In response, a Nvidia spokesperson dismissed these allegations as exaggerated, urging U.S. companies to prioritize innovation over what they called "tall tales." Previously, Nvidia CEO Jensen Huang also reportedly warned U.S. lawmakers that existing restrictions on AI chip exports might be inadvertently boosting Huawei Technologies' position in the global competition for AI leadership. Nvidia is demonstrating solid price momentum over the short, medium and long term, as indicated by Benzinga's Edge Stock Rankings. More detailed metrics are available here. Read Next: Alibaba, JD See Sales Soar In 618 Festival, Apple And Xiaomi Emerge As Top Selling Brands Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Image Via Shutterstock AMZNAmazon.com Inc$217.680.32%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum63.05Growth97.15Quality70.40Value49.84Price TrendShortMediumLongOverviewGOOGAlphabet Inc$180.191.44%GOOGLAlphabet Inc$178.821.55%NVDANVIDIA Corp$143.770.80%Market News and Data brought to you by Benzinga APIs

Chinese AI Models Trail U.S. by Just 3 to 6 Months, Warns AI Czar David Sacks -- Claiming That Overregulating US Tech Could Hand China the Lead

The US administration is concerned about China's progress within the AI segment, particularly Beijing's progress with AI models. The US government has managed to keep a tight hold on the AI hardware being shipped to Beijing through regulatory measures and by restricting NVIDIA from exporting chips with limited capabilities. While this certainly has stifled China's ability to grow in the AI domain, it has also driven the pursuit of domestic AI technologies, evident in the recent achievements of Huawei with their Ascend AI chips and DeepSeek with its AI models. President Trump's AI czar, David Sacks, has revealed that China's race for AI dominance is picking up, and the nation isn't far from coming ahead of the US. Sacks also expressed resentment towards the US being way more aggressive with its regulatory framework, claiming that restricting the development of AI infrastructure would only undermine the position of American technology and would ultimately allow China to offer its alternatives, not only at a far better price but with ease in restrictions. He says President Trump is aware of not "overregulating" US tech, which is why the administration rescinded Biden's AI Diffusion policy and is instead working on an alternative. I do worry we're on a trajectory where fear could overtake opportunity and we end up sort of crippling this wonderful progress that we're seeing. We rescinded that Biden diffusion rule, which...made diffusion a bad word. Diffusion of our technology should be a good word. - David Sacks via Reuters Talking about Chinese tech, Sacks claimed that Trump's visit to the Middle East was a testament to the US that they don't want China's AI chips to end up in regions where the US has dominated. He referred to how the "US-sanctioned" Huawei managed to sell its telecom equipment to Gulf states by leveraging the US regulations. He emphasized that the administration should remove hurdles to America's AI innovation, or, instead, competition from China will take over in the long run. He also suggested that China's AI models are just three months away from matching parity with the US's counterparts.

Trump's AI czar downplays risk AI chip exports could be smuggled

WASHINGTON (Reuters) -White House AI czar David Sacks on Tuesday downplayed the risk that coveted American AI chips could be smuggled to bad actors, and expressed concern that regulating U.S. AI too tightly could stifle growth and cede the critical market to China. "We talk about these chips like they could be smuggled in the back of a briefcase. That's not what they look like. These are server racks that are eight feet tall and weigh two tons," Sacks said at the AWS summit in Washington. "They don't walk out doors. It's very easy to basically verify that they're where they're supposed to be," he said. The comments indicated President Donald Trump's approach to AI could be centered on expanding markets abroad for U.S. AI chips and models. Former President Joe Biden had emphasized policies that countered risks the chips could be diverted to China and used to bolster Beijing's military. "I do worry we're on a trajectory where fear could overtake opportunity and we end up sort of crippling this wonderful progress that we're seeing," Sacks said, citing a raft of bills in state legislatures seeking to regulate AI, as well as permitting challenges facing companies seeking to build the data centers that power AI. Trump rescinded Biden's executive order aimed at promoting competition, protecting consumers and ensuring AI was not used for misinformation. He also rescinded Biden's so-called AI diffusion rule, which capped the amount of American AI computing capacity that some countries were allowed to obtain via U.S. AI chip imports. "We rescinded that Biden diffusion rule, which...made diffusion a bad word. Diffusion of our technology should be a good word," Sacks said. The Trump administration and the United Arab Emirates also announced a plan last month for the Gulf country to build the largest artificial intelligence campus outside the U.S. after Biden in 2023 put in place rules that curbed most AI chip shipments to the region. Taking aim at that regulation, Sacks said, "What play are we giving them? We're basically going to push them into the arms of China." He added that if, in five years, AI chips made by sanctioned Chinese telecoms equipment giant Huawei were everywhere, "that means we lost...We can't let that happen." The need to remove hurdles to U.S. AI innovation is urgent as China has made important advances in its AI models, Sacks said. This year, the Chinese AI app DeepSeek shocked the world with its sophisticated, affordably trained model. "China is not years and years behind us in AI. Maybe they're three to six months," said Sacks. "It's a very close race." The White House later said he was referring to China's AI models, adding that Chinese AI chips are one to two years behind their U.S. counterparts. (Reporting by Alexandra Alper; Editing by David Gregorio)