Why is Nvidia Opposing the GAIN AI Act?

The AI semiconductor sector is preparing for fresh export curbs as US lawmakers advance new legislation that would force domestic firms to prioritise American customers over international buyers.

The Guaranteeing Access and Innovation for National Artificial Intelligence Act of 2025 (GAIN AI Act), tabled within the National Defense Authorisation Act, stipulates that US developers of advanced AI processors must fulfil domestic demand for high-performance chips before exporting to international markets.

The move comes as Washington seeks to navigate the tension between safeguarding national security and protecting the commercial interests of the country’s largest technology players.

The Trump administration has rolled back the Biden-era AI Diffusion Rule, which restricted exports of computing power through a multi-tiered country system.

That framework was designed to “regulate the global diffusion” of cutting-edge AI chips and models, keeping the most powerful systems largely within the US and its trusted allies.

Understanding the GAIN AI Act framework

The GAIN AI Act represents a more direct approach to regulating AI chip exports compared to earlier measures.

The bill would compel US semiconductor firms to satisfy domestic demand before supplying advanced processors abroad, effectively establishing a US first policy for AI chip distribution.

Under the proposed legislation, exporters would be required to secure licences and federal approval for shipments of silicon that exceed defined performance thresholds. 

The GAIN AI Act sets this benchmark at a total processing power of 4,800 or higher, creating a clear standard for which processors trigger export controls. 

This marks a shift from the Biden administration’s intricate multi-tier country framework toward a more simplified, capability-based model. 

The policy is designed to ease supply pressures that have pitted US companies against global buyers in the race for advanced AI hardware.

By mandating priority access for domestic customers, lawmakers aim to ensure that American businesses, research institutions and universities can obtain the computing capacity needed to drive AI development without prolonged procurement bottlenecks.

Why Nvidia calls the restrictions unnecessary

Nvidia has strongly criticised the proposed legislation, contending that it already prioritises domestic demand. 

The company argues it already serves American customers first, with Reuters reporting that a spokesperson says: “We never deprive American customers in order to serve the rest of the world.

“In trying to solve a problem that does not exist, the proposed bill would restrict competition worldwide in any industry that uses mainstream computing chips.”

The GPU manufacturer has also compared the GAIN AI Act unfavourably to the rescinded AI Diffusion Rule, arguing that both measures risk undermining competitiveness in global markets.

“The AI Diffusion Rule was a self-defeating policy, based on doomer science fiction and should not be revived,” the company says.

“Our sales to customers worldwide do not deprive US customers of anything – and in fact expand the market for many US businesses and industries.

“The pundits feeding fake news to Congress about chip supply are attempting to overturn President Trump’s AI Action Plan and surrender America’s chance to lead in AI and computing worldwide.”

Company disclosures highlight that US buyers already make up Nvidia’s largest market, contributing 49.9% of revenue in fiscal 2024, compared with 28% from China and 18% from Singapore. 

The proposed restrictions, however, focus squarely on performance thresholds, calling for the denial of “licenses for the export of the most powerful AI chips, including such chips with total processing power of 4,800 or above.”

These benchmarks echo earlier export control regimes and would capture a range of AI accelerators currently in production. 

With GPUs now forming critical infrastructure for training large language models (LLMs) and other compute‑intensive AI systems, the rules could extend even to older Nvidia processors such as the HGX H20 and L2 PCIe, which were originally engineered to comply with prior restrictions while remaining available to overseas markets.

The industry split on domestic prioritisation

The legislation has divided industry opinion. 

Brad Carson, President of Americans for Responsible Innovation, supports the measure, arguing: “Globally, these chips are currently supply-constrained, which means that every advanced chip sold abroad is a chip the US can’t use to accelerate American R&D and economic growth.

“As we compete to lead on this dual-use technology, including the GAIN AI Act in the NDAA would be a major win for US economic competitiveness and national security.”

The supply constraint narrative reflects wider market dynamics in which demand for advanced chips continues to outpace global manufacturing capacity.

Data centre operators, cloud vendors and research institutions are locked in intense competition worldwide for access to next‑generation semiconductor technologies.

The GAIN AI Act is framed as a corrective measure, designed to guarantee that American “small businesses, start-ups and universities” can secure the latest AI GPUs ahead of international customers in countries deemed to present strategic concerns.

Brad concludes: “American buyers should be prioritised ahead of others, according to US legislators.”