Nvidia raises concern over GAIN AI Act, counters the legislation as anti-competitive

Nvidia raises concern over GAIN AI Act, counters the legislation as anti-competitive

Nvidia has expressed its reservations about the Guaranteeing Access and Innovation for National Artificial Intelligence Act (GAIN AI Act), calling it anti-competitive and potentially harmful to global chip markets. The act, which was introduced as part of the National Defense Authorization Act, mandates that AI chipmakers prioritize domestic orders for advanced processors before supplying them to foreign customers [1].

Nvidia's spokesperson argued that the proposed bill would restrict global competition in any industry that uses mainstream computing chips, with similar effects on the U.S. leadership and economy as the AI Diffusion Rule [1]. The company fears that the legislation would hinder its ability to serve global customers and could lead to a loss of market share. Moreover, Nvidia believes that the bill does not address any real security concerns, as it would not deprive American customers to serve the rest of the world [1].

The GAIN AI Act aims to ensure that domestic firms gain access to advanced chips while limiting China's ability to obtain high-end technology. However, Nvidia contends that this approach could stifle innovation and limit the growth of the AI market, which is projected to reach $3–$4 trillion by 2030 [2]. The company's chief executive officer, Jensen Huang, has previously stated that the AI race is a marathon, not a sprint, emphasizing the long-term nature of the technology's development [2].

Nvidia's concerns about the GAIN AI Act come at a time when the company is facing geopolitical headwinds and regulatory risks. The Trump administration's H20 chip export deal with China, which remains unimplemented due to regulatory delays, has been criticized as an "export tax" [2]. Additionally, China's push for self-sufficiency has cut Nvidia's China sales by 24% year-over-year, highlighting the potential impact of geopolitical tensions on the company's business [2].

In response to these challenges, Nvidia has been exploring strategic partnerships and innovative business models, such as its recent $1.5 billion partnership with Lambda to lease back 18,000 AI-powered GPU servers [3]. This circular leasing model generates recurring revenue while enabling Lambda to scale affordably, reinforcing Nvidia's dominance in the AI cloud ecosystem [3].

Despite the challenges posed by the GAIN AI Act and geopolitical tensions, Nvidia remains optimistic about its long-term prospects. The company's strong fundamentals, including its leadership in AI infrastructure and a projected 2025 revenue of $130.5 billion, suggest that it is well-positioned to navigate the evolving AI landscape [3].

References:
[1] https://www.thehindu.com/sci-tech/technology/nvidia-says-gain-ai-act-would-restrict-competition-likens-it-to-ai-diffusion-rule/article70018447.ece
[2] https://www.ainvest.com/news/wall-street-overconfidence-nvidia-ai-growth-signal-high-risk-high-reward-entry-point-investors-2508/
[3] https://www.ainvest.com/news/nvidia-circular-ai-strategy-leasing-chips-lambda-implications-cloud-infrastructure-investment-2509/