Current export controls are seen as too blunt and broad, applying to all buyers in China regardless of the intended use, even benign commercial applications. This approach risks damaging U.S. firms' market dominance and does not effectively prevent the proliferation of high-risk AI systems, as prohibited actors can still access chips through smuggling or cloud computing resources.

Governing AI chips through the cloud allows for more flexible and targeted controls, enabling better detection of misuse and improved cybersecurity. This approach can help maintain U.S. competitiveness in the chip market while ensuring that access to advanced AI capabilities is monitored and restricted for malicious uses.

The U.S. Commerce Department should monitor advanced AI chips outside of well-regulated cloud infrastructures to ensure they are only supplied to trusted actors. Implementing hardware-level controls and on-board licenses can help verify usage and enforce compliance, reducing the need for broad export controls that may harm U.S. industry.