Biden's AI Safety Executive Order Spurs Mixed Market Response

President Biden's recent executive order focusing on the "Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence" has sparked diverse reactions in the market. The directive, which requires entities to disclose information about large-scale computing clusters and total available computing power, has found support among those advocating for a necessary step towards ensuring the responsible progression of AI. However, concerns have been raised by others who fear the potential stifling of innovation and an undue level of government control over the dynamic AI industry.

In response to the executive order, the Department of Commerce (DOC) has unveiled its approach, entrusting the National Institute of Standards and Technology (NIST) with leading technical efforts on AI safety.

NIST has also issued a call for participants to join a new consortium aimed at establishing standards for AI safety and security. Simultaneously, the Department of Energy (DOE) has outlined specific initiatives it will spearhead in AI research and development. Similarly, the Department of Homeland Security (DHS) has clarified its pivotal role in safeguarding the nation against potential AI-related threats.

Beyond the governmental sphere, the executive order has reverberated in the smartphone market, yielding discernible impacts. According to Counterpoint, U.S. smartphone shipments witnessed a significant 19% decline in Q3 2023, marking the fourth consecutive quarter of descent.

Noteworthy is the substantial setback experienced by Samsung, Google, and TCL, with declines of 26%, 37%, and 51%, respectively. In contrast, Apple weathered the storm with a comparatively modest 11% dip, partly attributed to the delayed launch of the iPhone 15. On a positive note, Motorola and Nokia defied the trend by increasing their shipments by 31% and 17%, respectively.

Industry analysts attribute the decline in smartphone shipments to a combination of factors, including inflation, rising interest rates, and disruptions in the global supply chain. Importantly, the Biden administration's focus on AI safety is seen as an additional factor influencing this trend.

Some smartphone manufacturers express concern that the newly introduced regulations may increase the complexity and cost associated with developing and launching novel AI-powered features. As the market grapples with these changes, the intersection of AI governance and its impact on various sectors remains a focal point of both interest and scrutiny.