American tech giant Microsoft has urged United States President Donald Trump to loosen export controls on essential computer chips required for artificial intelligence (AI), contending that the restrictions are jeopardising the US’ leadership in AI technologies and its ability to close its trade deficit, two important foreign policy objectives.
In response to national security concerns, the previous Joe Biden administration imposed a cap on the export of American AI components to numerous foreign markets. Although the Trump administration has not yet changed these restrictions, Microsoft has cautioned the current President that doing so could give China a “strategic advantage” in promoting its own artificial intelligence technology since emerging markets will be compelled to turn away from the states for cutting-edge technologies.
The tech giant claimed that the restrictions also had an impact on American allies like Taiwan, South Korea, India, and Switzerland. In addition to placing these allies in a “Tier Two category,” the export restrictions “go beyond what’s needed” and place quantitative restrictions on American tech companies’ capacity to establish and grow AI data centres in their nations.
“The unintended consequence of this approach is to encourage Tier Two countries to look elsewhere for AI infrastructure and services. And it’s obvious where they will be forced to turn. If left unchanged, the Diffusion Rule will become a gift to China’s rapidly expanding AI sector,” Microsoft noted in its statement.
The United States and China are involved in a “chip war,” with China claiming that American chips are dangerous and advising businesses to use their own semiconductors. Both countries are vying to create and manufacture powerful chips in their own countries.
Microsoft announced plans to invest USD 80 billion in artificial intelligence data centres earlier in 2025, with a significant portion of this budget going toward export power. Along with pledging more than USD 35 billion in investments across 14 nations in 2024 to develop AI and data centre infrastructure, Microsoft has reaffirmed that the United States must work with “allies and friends” to stay at the top.