Navigating The Tangled Web of Tech and Trade.
With the change in administration in the United States and the implications of the DeepSeek-R1 model filtering through the AI sector, it’s a good opportunity to look at the implications of legislation that was signed into law by the Biden administration just a week before leaving power.
The Regulatory Framework for the Responsible Diffusion of Advanced Artificial Intelligence Technology is likely to impact the AI and HPC sector in a number of ways.
There are a range of reasons why UK and European buyers of AI and HPC systems need to take note. This is more than just an extension of export controls which the US has long wielded, there are some additional gotchas.
As a result, access to best-in-class hardware and AI models will face more regulatory approval and require greater proof of compliance.
Historically, controls such as these are at best speedbumps for those they are directly targeting and have arguably managed to make the problems they were intended to address mutate in interesting and unintended ways (including driving the behaviours further from sight).
I would like to say that these unintended consequences were somehow hard to predict, or that they came as a surprise to those of us in the industry, but that wouldn’t be accurate.
Like the original restrictions limiting the export of CPUs used in HPC to China, as many predicted it would, this simply accelerated China’s decision to invest heavily in their own capability to design, manufacture and innovate around key HPC components and infrastructure.
They have certainly closed the gap but China is prepared to play the long game. The AI race is likely to be even more hotly contested, and this time China is better prepared and, in a position to move more quickly and effectively than I think many in the West want to believe. This is a high-stakes game.
Regulatory compliance is an increasing burden for vendors and an additional point of friction for buyers.
Vendors have long been required to stay abreast of relevant legislation but shifts in US policy direction and increasing political uncertainty may introduce both predictable and unforeseen impacts on the sector
What we can say, without any doubt, is that supply chains are going get stickier as the decision making and approvals processes become ever more painstaking and with greater political calculus applied.
The new administration in the US has already shown that it is prepared to aggressively flex its muscles in order to achieve its goals and seemingly doesn’t care about the fallout from allies or foes.
I don’t think it’s a stretch to suggest that we will see access to AI and HPC technologies become an area of active political leverage.
Who the ultimate winners and losers are may have at least as much to do with personal influence as technological prowess.
Even for European integrated systems, the vast majority of the bill of material funnels money back to US headquartered companies or their respective supply chains.
Much of it will also fall under the auspices of old and new export control frameworks, so the OEMs, integrators and now end users will all have to shoulder some of the burden.
It also begs a fairly major geopolitical question around securing access to HPC and AI infrastructure and capacity at a national and supra-national level.
Also relatively new are the end-user constraints and end-user security conditions that are being imposed. We already had the low processing performance (LPP) and the advanced compute manufacturing (ACM) exemptions.
To this, we can now add the artificial intelligence authorisation (AIA) and updates to the validated end user (VEU) programme as well as national allocations (a top-level control to constrain the total amount of capability a single country can have).
For commercial organisations (as opposed to government sponsored buyers of AI and HPC capability – such as Tier 0/1 systems) there is now an additional layer of complexity to navigate based on where they are headquartered and operate outside of the US.
Now layer new controls on the model weights of the most advanced closed-weight AI models and you have a complex regulatory landscape for companies and institutions vying to supply GPU cycles to the burgeoning demand for training and running the new classes of AI workloads.
Do they now become responsible for vetting and ensuring that their customers are not exporting models and weights from their datacentres in different territories? Do they now have, previously implicit, but now increasingly explicit regulatory and security (as well as audit) requirements to satisfy?
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Dairsie Latimer
Technology Fellow
Red Oak Consulting
