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US bans some foreign investments in chips, AI, quantum computing

Not aimed specifically at China … just nations that behave a lot like China

President Biden has issued an executive order that prohibits certain entities from investing in US organizations if it will give the investor access to certain information technologies and/or US data.

It's catchily titled the Order on Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States. Or OERCENSRCFIUS for short, if you want to work it into song lyrics.

The Committee (CFIUS) is already required to consider whether inbound investments come from a nation "that has a demonstrated or declared strategic goal of acquiring a type of critical technology or critical infrastructure that would affect United States leadership in areas related to national security."

The executive order adds a requirement to consider investments in "microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced clean energy, and climate adaptation technologies" to make sure they don't threaten national security.

The order requires consideration of whether investors could access 'data on which threat actors could engage in malicious cyber‑enabled activities'

The order adds the requirement to consider whether a foreign investor can be trusted with American organizations' data.

CFIUS is therefore now required to consider if an investment "may provide a foreign person who might take actions that threaten to impair the national security … with direct or indirect access to capabilities or information databases and systems on which threat actors could engage in malicious cyber‑enabled activities."

Among the matters CFIUS is required to consider is whether a foreign investor could undertake "activity designed to undermine the protection or integrity of data in storage or databases or systems housing sensitive data."

Also on the to-do list is checking that foreign investors don't look likely to interfere with United States elections, mess with critical infrastructure, "the defense industrial base, or other cybersecurity national security priorities."

Foreign investors' "cybersecurity posture, practices, capabilities, and access of both the foreign person and the United States business" must also be considered, in case a stake in an organization could lead to "malicious cyber-enabled activity within the United States."

Most nations vet foreign investment, and national security is nearly always a criterion in those assessments.

This executive order gives CFIUS unusually strong direction to focus on the abovementioned technologies. Requirements to consider the infosec and data access implications of an investment are also notable.

The executive order doesn't mention any specific nation worthy of special attention from CFIUS. But press who were invited to a Q&A about the order – which the White House helpfully transcribed despite it being a background briefing – asked if it is directed at China.

China certainly matches the banned items: the Middle Kingdom sees quantum computing as a tool that could see it vault past US capabilities, has made AI a critical part of its economic strategy, and wishes to improve its domestic semiconductor manufacturing capabilities.

A senior Biden administration official replied: "there's nothing that's sort of China-specific about this order or CFIUS."

If any readers in China want to invest in US-based quantum silicon for an AI company, please let us know if you're allowed to do so! ®

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