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Hadas Lorber

Chip War: Israel on the Battlefield of the Great Power Tech Race

The recent export restrictions imposed by the Biden administration on advanced graphics processors to Israel are not merely a commercial or security issue. Instead, they reflect a broader global confrontation over technological supremacy. The escalating competition between the United States and China in advanced technologies, including artificial intelligence (AI), cybersecurity, and 5G infrastructure, has reached unprecedented levels. In this race, regulatory controls have become strategic tools to ensure American dominance while limiting China’s influence on the international stage.

Israel, the Chip Wars, and the Global Tech Struggle

Israel finds itself at the heart of this technological battlefield due to its status as a global innovation hub and its groundbreaking technological contributions. Graphics processing units (GPUs) are critical components in strategic fields such as machine learning, data-driven computation, and advanced simulations—areas where Israel is a world leader. However, the decision not to exempt Israel from the new US regulations underscores a sobering reality: even trusted technology partners are not immune to American concerns over potential technology leakage to China.

The United States views GPUs, including those developed by NVIDIA, as essential to the AI arms race, which is increasingly seen as a “new balance of power.” China, leading in government-backed AI investments, is progressing rapidly. American intelligence reports have warned that without stringent countermeasures, China could achieve a decisive technological advantage over the United States.

An Immediate Impact and Its Connection to Israeli Legislation

Israel is not among the 18 countries exempted from these new regulations, primarily due to its export control framework. Unlike many Western nations, Israel’s current export control laws do not comprehensively cover dual-use items—technologies that have both civilian and military applications. This regulatory gap has intensified American fears regarding the potential transfer of sensitive technology to adversarial nations, especially China.

Does the US Fear Losing Technological Dominance?

The answer is unequivocally yes. Recognizing that technology is the most valuable asset of the modern era, the US government is committed to safeguarding its global leadership. However, overly stringent regulations risk alienating close allies like Israel and stifling global innovation.

Is This the First Step Toward Bringing Semiconductor Manufacturing Back to the US?

The new policy may indicate a broader trend of reshoring critical technology production to the United States. This initiative stems from America’s strategic goal of reducing reliance on foreign manufacturing and enhancing industrial security. From Washington’s perspective, Israel represents not only a trusted ally but also a potential conduit for advanced technologies reaching less friendly markets. As a leading player that relies heavily on American technology, Israel must prepare for scenarios involving even stricter controls on essential components.

The Way Forward: Strategic Recommendations

Israel must leverage the political shift in the US and the more favorable Trump administration to advocate for regulatory relief. Coordinating efforts with major American tech companies that stand to lose from these restrictions, combined with domestic legislative initiatives, will increase the likelihood of overcoming these barriers. Given the long-term nature of the global tech race, Israel’s strategy must be multifaceted, encompassing diplomacy, legislative reforms, and enhanced export controls.

First, Israel should accelerate efforts to pass updated export control legislation that includes dual-use technologies. Aligning with US standards will strengthen trust and increase the likelihood of receiving exemptions from future restrictions. This step is crucial for reinforcing bilateral confidence in sensitive technology partnerships.

Second, direct and intensive diplomatic engagement with the US Department of Commerce is necessary. Since the restrictions were implemented as regulatory measures rather than executive orders, Israel must appeal directly to regulatory bodies. Utilizing the 120-day public comment period, Israel should propose solutions to mitigate American concerns without undermining trade.

Third, Israel should enhance monitoring mechanisms for sensitive technology use. By implementing stringent oversight for dual-use technologies, Israel can demonstrate its commitment to responsible technology management. Advanced control systems will alleviate US concerns and improve the chances of securing exemptions.

Fourth, partnering with leading American tech giants like NVIDIA and Intel is imperative. Mobilizing these industry leaders to highlight the economic harm caused by restrictive trade policies will increase political pressure to reconsider the regulations. The influence of major corporations is vital in achieving favorable outcomes.

Fifth, Israel should enlist the Republican-controlled Congress, traditionally supportive of Israel, to push for legislative action easing export controls. Collaboration with US lawmakers can drive policy changes that enhance economic and security ties between the nations.

The challenges posed by US export restrictions underscore the need for swift and strategic action from Israel. Success will require a comprehensive approach that integrates domestic regulatory reforms, bilateral diplomacy, and industry alliances. Only through coordinated and determined efforts can Israel maintain its leadership in the global tech arena.

Ultimately, the race for technological supremacy makes the US-Israel partnership more vital than ever. Balancing security with innovation will be essential for shaping a prosperous and secure future for both nations.

About the Author
Hadas Lorber, Founder and Head of the Institute for Applied Research in Responsible AI. Hadas is the former Senior Director for Foreign Policy at Israel’s National Security Council (NSC) and led the US-Israel Strategic Tech Dialogue.
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