The SCALE Act is a new law that puts strict controls on selling advanced computer chips (called AI hardware) to countries the U.S. considers adversaries or threats to national security. The main countries affected are China, Russia, Iran, North Korea, and Cuba, along with a few others on a government list.

Here's how it works: The Secretary of Commerce and the Director of National Intelligence must create a yearly measurement system to track how much advanced AI computing power these countries have—both chips they make themselves and chips they buy from other countries. Based on this annual assessment, the government sets a limit on how powerful any single chip can be before it's banned from export to these countries. The basic rule is that no chip sold to these countries can be more than 10% more powerful than the most advanced chip they're already making themselves in large quantities.

There's also a hard cap: the total computing power of all AI chips in adversary countries combined can never exceed 5% of what the U.S. has. If approving a sale would push them over that 5% limit, the sale gets automatically denied. Companies that want to sell chips under the upper limit (but not the hard cap) have to prove the chips won't go to military uses, won't delay U.S. orders, and won't make up more than half of what they're shipping to America. Every shipment also needs to be inspected by an independent U.S. testing lab before it leaves the country.