Sept 5 (Reuters) - Nvidia ( NVDA ) said on Friday the AI

GAIN Act would restrict global competition for advanced chips,

with similar effects on the U.S. leadership and economy as the

AI Diffusion Rule, which put limits on the computing power

countries could have.

Short for Guaranteeing Access and Innovation for National

Artificial Intelligence Act, the GAIN AI Act was introduced as

part of the National Defense Authorization Act and stipulates

that AI chipmakers prioritize domestic orders for advanced

processors before supplying them to foreign customers.

"We never deprive American customers in order to serve the

rest of the world. In trying to solve a problem that does not

exist, the proposed bill would restrict competition worldwide in

any industry that uses mainstream computing chips," an Nvidia ( NVDA )

spokesperson said.

If passed into law, the bill would enact new trade

restrictions mandating exporters obtain licenses and approval

for the shipments of silicon exceeding certain performance caps.

"It should be the policy of the United States and the

Department of Commerce to deny licenses for the export of the

most powerful AI chips, including such chips with total

processing power of 4,800 or above and to restrict the export of

advanced artificial intelligence chips to foreign entities so

long as United States entities are waiting and unable to acquire

those same chips," the legislation reads.

The rules mirror some conditions under former U.S. President

Joe Biden's AI diffusion rule, which allocated certain levels of

computing power to allies and other countries.

The AI Diffusion Rule and AI GAIN Act are attempts by

Washington to prioritize American needs, ensuring domestic firms

gain access to advanced chips while limiting China's ability to

obtain high-end tech amid fears that the country would use AI

capabilities to supercharge its military.

Last month, President Donald Trump made an unprecedented

deal with Nvidia ( NVDA ) to give the government a cut of its sales in

exchange for resuming exports of banned AI chips to China.