New Report: Evaluating an AI Chip Registration Policy

As part of our Governance Recommendations Research Program, Convergence Analysis is publishing a series of deep-dive analyses on specific, upcoming governance regulatory proposals. Our mission is to meaningfully contribute to the passing of critical & foundational governance policies that will serve to mitigate future risk from AI systems. 

The first report we’re releasing evaluates a potential US registration and transfer reporting requirement for high-end AI chips. You can read the full report here: Evaluating an AI Chip Registration Policy.

Abstract

Registering and tracking the ownership of high-end AI chips has become a widely discussed topic in US policy due to two factors: the developing US/China AI competition as evidenced by recent export controls limiting Chinese AI chip access, and the increasing attention on safety policies intended to mitigate risks from rapid progress in AI. However, very little work has been conducted regarding the feasibility or potential impacts of such a policy. This report will provide an overview of the current regulatory landscape for high- end AI chips, including US export controls on China and key organizations selling enterprise AI chips. We then explore the design of an AI chip registration policy, considering manufacturing registration, traceability requirements, and hardware security features. Finally, we propose a bill summary for such a policy and evaluate its feasibility, potential externalities, and effectiveness at enforcing US export controls & reducing AI risk. We argue that such a policy is feasible, likely to be implemented in the medium-term by the US executive branch, and will lay the foundation for future compute regulations.

Key Findings

The US executive branch is likely to be interested in implementing an AI chip registration policy in the near future due to its geopolitical AI competition with China. 

As evidenced by its comprehensive export controls limiting Chinese access to high-end semiconductors, the US executive branch (specifically the Biden administration) has displayed a willingness to take decisive action to slow China’s AI progress. Over the past two years, it has repeatedly increased the breadth of its export controls to improve enforcement, including strengthening restrictions on the types of chips permitted to export and restricting chip exports to certain countries in the Middle East, all with the intent of limiting Chinese access. In its quest to reduce chip smuggling to Chinese organizations, a blanket high-end AI chip registration policy is one of the next most likely enforcement mechanisms. 

A US AI chip registration policy passed in the near future would likely consist of a manufacturing registration requirement and transfer reporting requirements. 

There exist clear precedents in US policy for the design and implementation of manufacturing and traceability requirements, notably the International Traffic in Arms Regulations (ITAR) and the Foreign Direct Product Rule (FDPR). Though we discuss the possibility of additional on-chip hardware security features to better enforce such a registration policy, we conclude that such hardware features are difficult to implement and likely to be bypassable. As a result, we don’t believe it is likely that the US executive branch will include such requirements at this time.

Implementing a chip manufacturing registration requirement at this time has a streamlined enforcement strategy, requiring compliance from only 2-3 American chip vendors. 

There is currently an extremely narrow bottleneck for companies selling high-end AI chips, with Nvidia and AMD occupying >95% of the market share. Though there are dozens of organizations designing and manufacturing AI chips, almost none are competitive with Nvidia. The majority of other chip designers are selling cloud access to their custom, in-house chips rather than selling the chips themselves. As a result, the US government could work directly with only 2-3 companies (including Nvidia and AMD) to enforce a manufacturing registration requirement with low overhead. 

Implementing a chip transfer reporting requirement globally would require a drastic expansion of current FDPR laws. 

The US government has precedent policies mandating that American organizations report the transfer of certain classes of items to other entities, such as defense-related articles and military technology. However, it does not have existing precedent when it comes to enforcing such transfer reporting between any two international organizations. It could enforce such a requirement by leveraging and expanding the FDPR, placing non-compliant organizations under threat of removal from American supply chains (including future access to high-end AI chips). Such a maneuver would likely lead to substantial international pushback from US allies concerned about an overreach of American power and surveillance ability.

The US executive branch has the authority to create and enforce such an AI chip registration policy, but it lacks the ability to authorize additional funding.

The most likely strategy for the US executive branch to pass a chip registration policy is via an executive order directing the Bureau of Industry and Security (BIS) to create such a policy. This is immediately feasible - however, BIS is severely underfunded and may not be able to enforce such a policy without additional resources. The executive branch typically cannot allocate additional funding without congressional approval.

Due to gridlock in the US Congress, we don’t expect that an AI chip registration policy will be likely to be passed as legislation in the near future. However, both the administration leading the executive branch and the US Congress may change drastically with the upcoming 2024 election cycle.

A globally enforced AI chip registration policy would immediately improve enforcement of existing export controls, and lay the groundwork for future compute regulations based on an AI chip registry.

Such a policy would lead to a likely immediate reduction in the overall level of chip smuggling and provide more transparency into the distribution of high-end AI chips. It would give the US the ability to identify and monitor the compute capabilities of key organizations. Additionally, it would lay the groundwork for future compute regulations such as requiring mandatory on-chip security features or limiting the total amount of compute available to certain organizations.

An AI chip registration policy would have minimal negative externalities on overall AI innovation and Western competition, but may spur greater concerns about US governmental overreach.

As such a policy does not create or enforce any specific restrictions, it would not independently reduce innovation. However, it would make potential restrictive policies (such as compute limits for organizations) more feasible to implement. It would also likely negatively impact the competitiveness of Chinese and Chinese-affiliated AI organizations due to improved enforcement.

In particular, enforcing such a policy by mandating global transfer reporting via the FDPR would lead to international debate about the scope of the U.S’s geopolitical AI competition with China. Such reporting standards would likely set new precedents regarding American international monitoring and increase the gap between American-aligned and Chinese-aligned organizations.

Thoughts? We'd love constructive feedback or additional analysis: contact us at research@convergenceanalysis.org.