US President Donald Trump speaks during a the White House Crypto Summit in Washington, DC, March 7, 2025.
Jim Watson | AFP | Getty Images
White House AI czar David Sacks on Tuesday downplayed the risk that coveted American AI chips could be smuggled to bad actors, and expressed concern that regulating U.S. AI too tightly could stifle growth and cede the critical market to China.
“We talk about these chips like they could be smuggled in the back of a briefcase. That’s not what they look like. These are server racks that are eight feet tall and weigh two tons,” Sacks said at the AWS summit in Washington.
“They don’t walk out doors. It’s very easy to basically verify that they’re where they’re supposed to be,” he said.
The comments indicated President Donald Trump’s approach to AI could be centered on expanding markets abroad for U.S. AI chips and models. Former President Joe Biden had emphasized policies that countered risks the chips could be diverted to China and used to bolster Beijing’s military.
“I do worry we’re on a trajectory where fear could overtake opportunity and we end up sort of crippling this wonderful progress that we’re seeing,” Sacks said, citing a raft of bills in state legislatures seeking to regulate AI, as well as permitting challenges facing companies seeking to build the data centers that power AI.
Trump rescinded Biden’s executive order aimed at promoting competition, protecting consumers and ensuring AI was not used for misinformation. He also rescinded Biden’s so-called AI diffusion rule, which capped the amount of American AI computing capacity that some countries were allowed to obtain via U.S. AI chip imports.
“We rescinded that Biden diffusion rule, which…made diffusion a bad word. Diffusion of our technology should be a good word,” Sacks said.
The Trump administration and the United Arab Emirates also announced a plan last month for the Gulf country to build the largest artificial intelligence campus outside the U.S. after Biden in 2023 put in place rules that curbed most AI chip shipments to the region.
Taking aim at that regulation, Sacks said, “What play are we giving them? We’re basically going to push them into the arms of China.”
He added that if, in five years, AI chips made by sanctioned Chinese telecoms equipment giant Huawei were everywhere, “that means we lost…We can’t let that happen.”
The need to remove hurdles to U.S. AI innovation is urgent as China has made important advances in its AI models, Sacks said. This year, the Chinese AI app DeepSeek shocked the world with its sophisticated, affordably trained model.
“China is not years and years behind us in AI. Maybe they’re three to six months,” said Sacks. “It’s a very close race.” The White House later said he was referring to China’s AI models, adding that Chinese AI chips are one to two years behind their U.S. counterparts.
