0x0a US Chip Export Controls May Be Venturing Into Uncharted Territory
Announcing Our Newest Fellowship and an explainer on Hardware and Chip-Based Governance Mechanisms
We launched a new fellowship!
And, as the US solicits technical solutions to enforce its semiconductor export controls on China, its examination of Hardware-Enabled Governance Mechanisms may inadvertently create geopolitical strife and paradoxically weaken the US's standing with its allies and partner nations instead. Satya Sahu explains.
Announcing Our Newest Fellowship!
We launched the Network for Advanced Study of Technology Geopolitics (NAST) Fellowship.
The fellowship aims to build high-quality scholarship in India at the intersection of technology and geopolitics. Discussions around emerging and critical technologies often lack a prudent understanding of how emerging technologies, geoeconomics, and geopolitics interact and can play a pivotal role in shaping India’s national power. The aim is to create a cross-disciplinary community of scholars and a body of knowledge that will inform policy, strategy, economics, technology and society.
Who Should Apply?
The NAST Fellowship offers opportunities for analysts and scholars to work under the co-guidance of foremost experts in international relations, emerging technologies and governance and work towards a publication in the leading journals and reviews in these fields. NAST is a one-year-long fellowship which is completely online and includes a two-day in-person conference/workshop in Bengaluru. In addition, a cash prize of ₹ 1 lakh will be awarded to the three best papers determined by the jury.
NAST invites applications from researchers from any background, including from universities, research institutes, media, government services and industry, who are enthusiastic about undertaking fresh research on the geopolitics of critical and emerging technologies and their impact on India or globally.
Fellows will have the opportunity to work with mentors, who will be among the leading experts (including C. Raja Mohan, Douglas Fuller, Kailash Nadh, and Rahul Matthan) in the field of critical and emerging technologies with expertise in the intersection of geopolitics, geoeconomics and innovation. NAST Fellows will gain invaluable skills in research, critical thinking, analysis, communication, etc., through this mentorship opportunity.
Prospective fellows must either be working or studying in India, have at least an undergraduate degree and be proficient in English.
New Developments In Hardware-Based Compute Governance
-Satya Sahu
Two recent publications, one by the Center for a New American Security and another by the RAND Corporation's Technology and Security Policy Center have introduced proposals for on-chip and hardware-enabled governance mechanisms (HEMs) in specialised leading-edge chips. However, the US's pursuit of these governance mechanisms, though ostensibly a measure to contain China's influence, may inadvertently create geopolitical strife and paradoxically weaken the US's standing with its allies and partners.
In October 2022, the US Department of Commerce's Bureau of Industry and Security (BIS) introduced a set of stringent export controls, further reinforced by the October 17, 2023 Interim Final Rules, marking a critical juncture in the US-China tech war. These controls target advanced chips and chipmaking equipment, primarily restricting China's ability to harness high-performance advanced computing and Artificial Intelligence (AI) for purposes deemed contrary to US interests, including mass surveillance and weapons development.
As the BIS reportedly solicits technical solutions to achieve these export control policy goals, both publications argue for embedding secure physical features built directly into the design of such chips to enforce export regulations and consequently granting the US the ability to regulate the usage and users of these chips. These propositions, emerging within weeks of each other, represent a strategic pivot in the US’ ambitions to enforce export controls and oversee the use of high-risk dual-use technologies such as AI.
Integrating HEMs at the chip level allows the functionality and application of advanced chips to be restricted or modified in real-time per predetermined rules and standards tailored to align with the US' national security interests and export regulations. These proposals come amid questions about the effectiveness of the current export control regime targeting the physical movement of controlled chips globally, particularly to China.Â
Existing export controls have come under criticism for being ineffective due to the presence of diversion risks like smuggling or purchases by shell companies in other jurisdictions. A notable case is Nvidia's sales in Singapore, which significantly increased. In the third quarter of fiscal year 2023, Singapore accounted for approximately 15% of Nvidia's quarterly revenue, amounting to around $2.7 billion. As analysed by experts, this surge could be attributed to both Singapore's role as a data centre hub and its strategic location, making it a potential transhipment point for chips to be sent to Chinese entities, bypassing the American export-control regime.
Additionally, US and allied countries' semiconductor firms are increasingly apprehensive about losing access to the $350 billion Chinese market if they have to restrict imports of certain hardware completely. Since HEMs can detect specific workloads that exceed the computing capability thresholds mandated by export controls, they can reduce chip capabilities on the fly or even disable them, apparently bypassing the need for "cruder" bans on the supply of hardware. This approach also allows for dynamic adjustments to compute thresholds as export controls change, which could be done remotely via firmware updates.
If demonstrably impervious to tampering, HEMs could be a tool to limit the capabilities of advanced semiconductor chips for developing or operating cutting-edge AI models by the US' adversaries while ensuring minimal impact on the chips' performance in other commercial and consumer settings. Therefore, HEMs may become more than a theoretical approach in compute governance for the US in the long term.
However…
The BIS' consideration of HEMs could inadvertently strain international relations and semiconductor market dynamics. The significance of this approach is amplified by the US' dominant position in the semiconductor supply chain, which it has leveraged to levy export controls. US firms lead in R&D-intensive activities such as electronic design automation (EDA), core intellectual property (IP), chip design, and development of advanced manufacturing equipment, benefiting from their strong innovation ecosystem and skilled workforce. But leveraging this dominance via HEMs also brings the risk of creating tensions with allies and partners like India and the EU, which are striving to build resiliency, reduce vulnerabilities in semiconductor supply, and guard against potential hardware backdoors in imported chips.
The crux of the issue lies in the potential overreach these mechanisms represent. Current export controls targeting China are generally internationally accepted, as they do not interfere with post-acquisition ownership rights; HEMs change this calculus. By introducing the capability to modify or disable a chip's functionality remotely, these mechanisms will engender persistent concerns among international consumers and governments. The apprehension is about more than losing control over purchased critical technological hardware and its advertised capabilities; it is also about the broader implications of US influence on countries' sovereignty.
If chip manufacturers can disable chips remotely, it raises serious questions about the reliability and independence of these devices. A pertinent example of the implications of vendor-controlled kill switches would be John Deere's actions following the Ukraine-Russia war. The agricultural machinery company bricked the chips in stolen Ukrainian tractors remotely, effectively rendering the machines inoperable and unusable to Russian forces. While rooted in compliance with international regulations and sanctions, this move underscores the potential for companies to unilaterally alter the functionality of their products post-sale, a prospect that can deter consumers and partner states wary of such overarching control.
The effectiveness of HEMs hinges on the possibility of a fragile international consensus. Without broad global buy-in, implementing a HEMs-based strategy will alienate vital US allies and estrange prospective partner countries. Such a move could also cede ground in the very technological domains and markets the US seeks to control in its bid to reduce Chinese sway on chokepoints in the global value chains for semiconductors and other transformative technologies.
At the end of the day, export controls aim to deny a key technology or product to an adversary. As a policy goal, denial is a flawed objective to aim for in an interconnected world with intricately linked global value chains. A move towards HEMs represents a significant escalation, potentially laden with unintended consequences, particularly as the full impact of existing export controls remains to be seen in the longer term.
Rather than seeking absolute control over hardware and attempting total denial of technology, a more effective goal for the U.S. is to outpace its adversaries. This necessitates refining the existing export control regime to plug leakages via diplomacy and cooperation with trusted nations rather than attempting to implement technical measures that would isolate it from the very partners it needs to stay ahead in this technological race.Â