The Biden Administration is preparing to leave office but is planning to launch an aggressive chips campaign before it goes. South China Morning Post reported that the US government may be revealing new restrictions targeting China’s black-market trade in advanced chips during Biden’s last week in the White House. The so-called “global artificial intelligence (AI) diffusion rule” will aim to limit Chinese companies’ sourcing of advanced artificial intelligence (AI) chips from unrestricted third-party countries. These changes aim to close any existing regulatory loopholes that may allow China to get its hands on powerful graphics processing units (GPUs) essential for training AI models.
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In response, Reuters reported on Tuesday, January 7th, that a technology industry group in the US has urged President Joe Biden’s administration to refrain from issuing a last-minute rule related to the control of global access to AI chips. They warn that these restrictions would harm US leadership in artificial intelligence instead. The Information Technology Industry Council, which represents companies like Amazon and Microsoft, said the rule could come out as soon as Friday. It also said that the rule could place arbitrary constraints on U.S. companies’ ability to sell computing systems out of the country, as well as abandon the global market to competitors.
While a major objective of these controls is to keep artificial intelligence from boosting China’s military capabilities, the technology group believes that it is going to do more harm than good. Previously, the South China Morning Post reported that Washington planned to issue the rule by the end of December 2024. However, the Biden administration had decidedly postponed the release due to delays in expert reviews which were a result of US government “budgetary issues”. Nevertheless, the new controls are anticipated to be released before Biden leaves office.
ITI CEO Jason Oxman has also criticized the administration’s “insistence” on issuing the rule in the final days of Joe Biden’s presidency. Here is what he said:
“Rushing a consequential and complex rule to completion could have significant adverse consequences”.
-Oxman said in the Jan. 7 letter, a copy of which was obtained by Reuters.
ITI also said that even though such rules are commendable, the letter said that “the potential risks to U.S. global leadership in AI are real and should be taken seriously”.
Ken Glueck, executive vice president at Oracle also said in a blog post that the rule “drops the Mother of All Regulations on the commercial cloud industry, regulating… nearly all commercial cloud computing globally for the first time in history.” He said that the controls “will go down as one of the most destructive to ever hit the U.S. technology industry”.
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A close up of a circuit board, its microchips creating a powerful computing system.
10. Penguin Solutions, Inc. (NASDAQ:PENG)
Penguin Solutions, Inc. (NASDAQ:PENG) is a leading AI infrastructure provider for organizations looking to build and operate state-of-the-art generative AI facilities. On January 6th, Loop Capital initiated coverage of Penguin Solutions (PENG) with a “Buy” rating and a $30 price target.
“We’re Initiating on PENG with a Buy and $30 PT. … We believe PENG is an on-the-come Gen AI related company with teeth in important areas of critical next generation technology.”
The company is set to report its first-quarter results on Wednesday, January 8th. According to analyst Ananda Baruah, the company has multiple catalysts in the next one to two years, both fundamental and a “special situation” via SK Telecom that make its story “very intriguing”. Penguin recently closed a $200M strategic investment from South Korean company SK Telecom. The relationship between the two could turn into a catalyst if Penguin ends up building Gen AI data centers for the Korean company. Another catalyst is Penguin’s strong management team, noted the analyst.
“This serves as a ‘top of funnel sales’ relationship for PENG…while allowing SK Telecom to help offset the cost of Data Center construction as their 10% stake in PENG goes up in value”.
-Analyst Ananda Baruah.
9. Soluna Holdings, Inc. (NASDAQ:SLNH)
Number of Hedge Fund Holders: 3
Soluna Holdings, Inc. (NASDAQ:SLNH) develops green data centers for intensive computing applications including Bitcoin mining and AI. On January 6th, Soluna Holdings announced that it has entered into a new agreement with Atlas Cloud (“Atlas”), a company that offers cutting-edge cloud solutions and IT services. Atlas Cloud is the second customer secured through Soluna’s collaboration with Hewlett Packard Enterprise (HPE) GreenLake, a partnership that enables them to bring scalable, sustainable AI cloud solutions to the market. The agreement also strengthens Soluna’s presence in sustainable, high-performance AI computing.
The one-year agreement requires Soluna to provide Atlas with 64 Nvidia H100 GPUs and possibly scale to more. The cluster will enable the support of advanced AI video processing workloads for Atlas and its customers. The deal marks Soluna’s sale of one-third of its initial Cluster from HPE Greenlake, exemplifying success in meeting the demand for energy-efficient AI solutions.
“Our work with Atlas Cloud exemplifies Soluna’s ability to deliver sustainable, high-performance AI cloud services across a range of industries. Building on our first AI customer, this second engagement demonstrates the strength of our collaboration with HPE GreenLake. We’re proud to be powering Atlas’s advanced video processing workloads and expanding our reach in the AI ecosystem”.
– John Belizaire, CEO of Soluna.
