Israel to bring forward procurement of AI chips ahead of Biden’s new export rules

Israel is planning to bring forward the procurement of artificial intelligence chips and processors before new export rules by the Biden administration to limit access to the advanced computer chips are set to come into effect.

“In light of the new restrictions by the Biden administration, the ministry will make purchases that were planned for 2026 and 2027 over the next 120 days before they are expected to come into effect,” said Lt. Col. Elad Dvir, the head of the Defense Ministry’s AI branch. “The new regulations will no doubt have strategic repercussions as they will obligate the ministry to explain the purpose of every purchase of an AI chip.”

Speaking at an emergency discussion by the Knesset’s subcommittee on Artificial Intelligence and Advanced Technologies on Wednesday, Dvir said that the new regulation for exports of AI chips would mostly apply and affect the country’s defense industries.

Defense Ministry director-general Eyal Zamir said last month, that AI technology will be a game-changer over the next decade as AI robots in land, air and sea will lead the modern warfare battlefield. AI technology has become more central in the Israeli army’s offensive and defensive capabilities, whether for intelligence gathering, control of forces, or operational capabilities.

Zamir cautioned that those armies that will adapt AI capabilities first will have a massive advantage and that countries that will not invest in the implementation of the revolutionary technology will fall behind.

MK Orit Farkash Hacohen who headed the committee meeting warned that the new restrictions by the Biden administration come after the State Comptroller recently cautioned that Israel lacks a long-term national strategy on AI strategy and investment and is declining in international rankings.

Illustrative. Computer processors. Conventional computers process information, or bits, each of which can be either a zero or a one, in the binary language of computing. Quantum bits, however, used by quantum computers, can be both a zero and one simultaneously. (Rost-9D; iStock by Getty Images)

“The new and very dramatic US directive divides the world’s countries into axes, and Israel is not in the highest tier of its partners,” said Hacohen. “Israel has missed an opportunity to come prepared for such a day.”

“The government must also set a national strategic goal of being an ally of the US in technological capability,” Hacohen added.

The Biden administration on Monday proposed a new framework that divides the world into three tier categories for access to advanced computer chips used to develop AI models. In the first tier are 18 countries, including the US and key allies, which would face no restrictions on accessing chips. Israel is among 150 countries in the second-tier category, along with Mexico, Portugal. and Switzerland, which under the framework would be able to import AI chips from the US but with strict limits on computing power.

According to the new restrictions, there would also be a “bureaucratic” approval process to import AI processors or processors with AI capabilities such as graphics processors for gamers that are sold by US companies to Israel. In practice, the export of every advanced processor being sold by US chip giants such as Nvidia or Intel that is being used for AI development would need to get separate approval by the US regulator.

Local industry experts have already raised concerns that the new restrictions will make it much harder for Israel to keep up the AI pace, as the US with the new regulation is essentially choosing the winners and the losers of the AI revolution.

Also speaking at the committee meeting, Ariel Sobelman, a senior researcher at the Institute for National Security Studies, called on the government to act swiftly in light of what he referred to as a danger to Israel’s technological status.

DGX Quantum is a system for quantum-classical computing developed by Nvidia and Israel’s Quantum Machines. (Courtesy)

“For a year now we have been warning about the ongoing decline in Israel’s AI standing and the US restrictions will only accelerate this trend,” said Sobelman. “In an era when infrastructure is a precondition for the next technological revolution and AI chips are a key raw material, Israel needs a clear national AI strategy.”

“The current plans do not provide an answer for that need and Israel is already falling behind in the AI race,” he said.

Israel ranks among the top 10 ecosystems for AI, but it is far from unlocking the full potential of revolutionary technology as competition in the global AI race intensifies. Over the past year, industry leaders and tech entrepreneurs have warned that Israel is missing the AI wave and needs to implement a long-term strategy to allocate money and resources to boost education and academic research, encourage startups, and provide the infrastructure and computational power needed to run AI models.

Lemonade CEO Daniel Schreiber forecasted that over the coming decade, several companies in the chip industry around the world will achieve trillion-dollar valuations.

“Israeli firms are unlikely to be among them,” said Schreiber. “This will be a missed opportunity for generations.”

Hacohen urged the government to take advantage of the final days before the US regulations go into effect and seek to change the decision as it pertains to Israel. The government should also set a national strategic goal of being an ally of the US in technological capability, she demanded.

“Since its inception, Israel has invested [resources] to prevent its dependence on others – in water, wheat, and more,” said Sobelman. “Technological dependence is no different, and a commitment to security also requires that Israel will not be technologically dependent on other countries.”