Commerce secretary says more money needed to block AI chip exports to China

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SIMI VALLEY, California — The U.S. government must dramatically increase funding aimed at blocking sensitive artificial intelligence microchip tech exports to China, according to Commerce Secretary Gina Raimondo. She warns that Beijing is aggressively trying to evade Washington’s expanded export controls.

Ms. Raimondo told the Reagan National Defense Forum over the weekend that her department’s Bureau of Industry and Security, which regulates export restrictions on the most sensitive technologies from private industry, is dramatically underfunded.

“BIS has the same budget today that it did a decade ago,” she told the audience during the annual forum at the Ronald Reagan Presidential Library here. 

“I get calls from members of Congress — Democrats and Republicans — constantly [saying], ’Why aren’t you doing more, why aren’t you controlling more with artificial intelligence? Why aren’t you controlling more with semiconductors?”

She added, “I agree with them. I have a $200 million budget. That’s like the cost of two fighter jets. Come on, are we serious?” she said. “So, fund this operation that needs to be funded, so we can do what we need to do to protect America.”

The AI race between the U.S. and China featured prominently at the Reagan forum, where discussion among lawmakers, tech and defense industry leaders and U.S. military commanders veered repeatedly toward the topic of high stakes involved in AI weaponization by both the Chinese and U.S. militaries.

During one panel, Rep. Mike Gallagher, the Wisconsin Republican who chairs the House Select Committee on the Strategic Competition Between the U.S. and the Chinese Communist Party, argued that the Chinese are bent on using AI to “turbocharge their war machine” and “establish a totalitarian surveillance state.”

Pentagon Indo-Pacific Command Commander Adm. John Aquilino in another panel discussion underscored the stakes of the AI race, asserting that China is engaged in “the largest military buildup in history since World War II, at the greatest speed, both in the conventional lane and the strategic nuclear lane, across all domains, maritime air, land, space [and] cyberspace.”

For the U.S. military, Adm. Aquilino said, AI is already being integrated into America’s defense and deterrence strategy in East Asia, where U.S.-China tensions have run increasingly high.

He emphasized that one of the “greatest advantages” the U.S. military has is the potential to harness the “innovation of the people here in Silicon Valley and take those capabilities and weave them into warfighting requirements.”

With regard to the Pentagon’s Indo-Pacific Command specifically, Adm. Aquilino said the AI can undergird U.S. military “decision superiority:” dominance in the tactical decision-making process to maintain advantages over potential enemies.

“This is a true race and people are trying to catch us,” he said. “For me, decision superiority looks like this — the ability to blind, see and kill any adversary that decides to take us on. … Those technologies that are there, the algorithms, the large model, language model options and AI however you describe it feeds directly into my blind, see and kill requirements.”

Analysts say Chinese military commanders hold a similar view of AI’s potential to dramatically transform the global military thinking. China’s government has identified AI as one field of technology Beijing wants to dominate by the middle of the century.

AI is dependent on advanced microchips or semiconductors. Concern over China’s theft of designs of the most advanced chips developed by U.S. companies has driven the Biden administration to begin imposing controls in recent years on sensitive American tech sector exports to China. The administration has also sought to coordinate with advanced chip-producing allies, including the Netherlands, Germany, South Korea, Japan and Taiwan, in hopes of limiting Chinese AI progress.

Commerce at the crossroads

The Commerce Department’s BIS, as Ms. Raimondo noted, is at the center of the effort. Despite the funding challenges, the bureau has “taken a very aggressive, new innovative approach” to export controls. Last year, she added,  was the “first time ever that we denied an entire country — China — [access to] a suite of semiconductors.”

“America leads the world in advanced semiconductor design. Period, full stop. That’s because of our private network. That’s because we have great innovators,” she said. “We’re a couple years ahead of China. … We cannot let them catch up. So we’re going to deny them our most cutting-edge technology.”

“Supercomputing, AI technology, AI chips in the wrong hands is as deadly as any weapon that we could provide,” Ms. Raimondo added. “We have to be serious about enforcement. The other thing we need is resources for U.S. Commerce Department workers.”

Chinese officials, she said, “wake up trying to figure out how to do an end-run around our export controls.”

“Every minute of every day, which means every minute of every day, we have to wake up tightening our controls, and being more serious about enforcement — with our allies, with the Dutch, with the Japanese, with the Europeans,” Ms. Raimondo said.

But the effort is complicated, she said, because excessive export restrictions result in revenue shortfalls for the U.S. tech sector, and threaten to stifle American companies racing to advance AI technologies.

“It’s a constant battle. If you go too far with export controls, you deny U.S. companies revenues which they need to continue to innovate,” Ms. Raimondo said. “And if you do it with our allies, that’s doubly problematic. What good is it to deny U.S. companies revenues if China gets the technology anyway from the Germans, the Dutch, the Japanese or the Koreans?”

“Having said that, if you don’t go far enough, China gets the technology and they do nuclear simulation or whatever they want,” she said.

The commerce secretary acknowledged that the U.S. and Chinese economies are intertwined across a wide slate of less sensitive manufacturing and trade. With China third behind Canada and Mexico on the list of top U.S. trade partners worldwide, Ms. Raimondo argued that it is in Washington’s interest to keep diplomatic and economic communication open.

While she said there is “a lot” of U.S.-China job-producing commerce occurring outside the defense sector, she stressed the trade arrangement “should be reciprocal.”

Tension on trade hung over President Biden’s meeting last month with Chinese President Xi Jinping on the sidelines of the annual Asia Pacific Economic Cooperation leaders summit in California. But a White House statement on the meeting said the two sides only spoke of the need to address the risks associated with advanced AI systems and to improve AI safety through official bilateral channels talks — disappointing those who hoped Mr. Biden would take a more direct line.

At the Reagan forum over the weekend, Ms. Raimondo stressed that without communication, the U.S. and China will “move more rapidly to escalation and tension.”

“But don’t confuse communication with weakness or softness,” the commerce secretary said. “On matters of national security, you’ve got to be eyes wide open about the threat. This is the biggest threat we’ve ever had and we need to meet the moment.”