FILE PHOTO: Nvidia logo is seen on graphic card package in this illustration taken August 19, 2025. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) -Nvidia said on Friday the AI GAIN Act would restrict global competition for advanced chips, with similar effects on the U.S. leadership and economy as the AI Diffusion Rule, which put limits on the computing power countries could have.

Short for Guaranteeing Access and Innovation for National Artificial Intelligence Act, the GAIN AI Act was introduced as part of the National Defense Authorization Act and stipulates that AI chipmakers prioritize domestic orders for advanced processors before supplying them to foreign customers.

"We never deprive American customers in order to serve the rest of the world. In trying to solve a problem that does not exist, the proposed bill would restrict competition worldwide in any industry that uses mainstream computing chips," an Nvidia spokesperson said.

If passed into law, the bill would enact new trade restrictions mandating exporters obtain licenses and approval for the shipments of silicon exceeding certain performance caps.

"It should be the policy of the United States and the Department of Commerce to deny licenses for the export of the most powerful AI chips, including such chips with total processing power of 4,800 or above and to restrict the export of advanced artificial intelligence chips to foreign entities so long as United States entities are waiting and unable to acquire those same chips," the legislation reads.

The rules mirror some conditions under former U.S. President Joe Biden's AI diffusion rule, which allocated certain levels of computing power to allies and other countries.

The AI Diffusion Rule and AI GAIN Act are attempts by Washington to prioritize American needs, ensuring domestic firms gain access to advanced chips while limiting China's ability to obtain high-end tech amid fears that the country would use AI capabilities to supercharge its military.

Last month, President Donald Trump made an unprecedented deal with Nvidia to give the government a cut of its sales in exchange for resuming exports of banned AI chips to China.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Alan Barona)