To mark the start of Trump’s second term, global attention is focused on the potential impact of Trump-influenced politics in the AI sector on the industry. With the US government raising trade barriers due to concerns over national security and technology leakage, there are analyses suggesting that a strictly domestic-focused investment policy could hinder America’s global AI leadership. US big tech companies, aiming to dominate the global AI market, are encountering an unexpected hurdle in the form of Trump’s push for a domestic-centered industrial ecosystem.
On January 3rd, Microsoft (MS) posted an article titled “An Opportunity for American AI” on its official blog under the name of Vice Chairman Brad Smith. The article referenced an executive order signed during Trump’s first term with the aim of “maintaining American AI leadership,” highlighting consistent AI investment, improving workers’ AI skills, and expanding global AI exports as key elements for competitive advantage.
Brad Smith stated that “MS plans to invest approximately $80 billion (about 117.76 trillion won) in building AI data centers by the 2025 fiscal year.” The company’s 2025 fiscal year runs from last July to the coming June. Indicating alignment with the new government’s protectionist stance, he added, “More than half of this investment will be made in the US, reflecting MS’s commitment to America and confidence in the American economy.”
Smith further suggested, “The US should focus on strengthening its domestic economy by exporting American AI to US allies and ensuring other countries benefit from AI advancements.” This comes in light of growing concerns as export restrictions are predicted to expand from AI semiconductors and hardware (HW) to include open models and cloud software (SW).
The US government, having announced restrictions on high-bandwidth memory (HBM) exports to China, is also considering setting export volume limits on items like graphics processing units (GPU) to certain countries. The goal is to prevent China from bypassing direct imports of US AI semiconductors through third countries like Southeast Asia or the Middle East.
Additionally, the Brookings Institution, a US think tank, suggested that the new Trump administration might take measures against countries like China accessing US big tech’s cloud services for AI. “It’s important to address this gap in a way that avoids collateral damage to the US AI ecosystem,” they commented.
Especially under review since May, the restriction on exporting open models to China could become a reality in Trump’s second term. Last November, it was reported that researchers from China’s People’s Liberation Army Academy of Military Sciences developed a military chatbot based on Meta’s open model ‘Rama,’ accelerating related discussions.
In this context, Smith pointed out, “With China’s rapid AI development, competition between US and Chinese AI has intensified, likely leading to further global market competition over the next four years.” He emphasized, “While the US government focuses on protecting sensitive AI components in secure data centers through export controls, the crucial element in this competition is both the US and China’s race to proliferate their technology to other nations.”
Considering the nature of tech markets and potential network effects, he noted, “In the international influence competition between the US and China, the fastest first-mover is likely to win.” Citing the past example of Huawei, which leveraged government support to penetrate developing markets and surpass US and European companies, he advocated for “a wise global strategy to quickly support US AI worldwide.”
For MS, despite investing in the UAE’s state-owned AI company G42 and promoting local data center construction, plans were delayed due to G42’s ties with several Chinese companies involved in military and research. They eventually received US government approval for AI semiconductor exports last month, conditional on removing Huawei equipment and restricting access to sanctioned entities like China.
Smith concluded, “Public policy priorities should ensure that the US private sector thrives with the wind at its back. We cannot afford stringent regulations that slow domestic private sector growth.” He called for a “practical export control policy that balances the ability to provide stable supplies to many US allies and partners.”
He also remarked, “The next four years are a time to lay the foundation for America’s economic success for the next 25 years,” emphasizing that “the US can win the essential competition with China by advancing the international adoption of American AI.”