The Trump administration walked back proposed regulations on how many artificial intelligence chips other countries can buy, reversing a rule established by the Biden administration.
On May 13, the Commerce Department removed caps on sales to countries that could previously only purchase a limited supply of advanced chips. Some of those countries are India, Switzerland, Mexico, and Israel.
One immediate effect of the change will be its likely benefits for NVIDIA; shares of the company’s stock rose 3% after the news about the AI chips export rule change was first announced on May 8.
Industry guidance issued instead of AI diffusion rule
The restrictions around AI chips, often known as the AI diffusion rule, were proposed in December 2024 and were scheduled to go into effect on May 15. The Biden administration designed the rule to keep advanced chips out of China’s hands. At the time, the administration planned a white list of allied countries with no restrictions, a black list of disallowed adversaries, and a third tier that could buy a limited number of advanced US chips; this third tier would have included most countries, including some of America’s allies.
In January, NVIDIA called the AI export rule misguided. In February, Microsoft pushed for the planned AI diffusion rules to be amended to allow technology companies to sell to more countries allied with the US.
The federal government on Tuesday instructed staff not to follow the diffusion tier rule that would have gone into effect on May 15. They reminded organizations not to use Huawei’s Ascend AI chips, warned against “allowing U.S. AI chips to be used for training and inference of Chinese AI models,” and planned to issue guidance for US companies on how to “protect supply chains against diversion tactics.”
The federal government expects to produce a formal notice and a replacement rule “in the future.” Axios predicted new guidance within a few months.
“The Trump Administration will pursue a bold, inclusive strategy to American AI technology with trusted foreign countries around the world, while keeping the technology out of the hands of our adversaries,” ckwrote Secretary of Commerce for Industry and Security Jeffery Kessler. “At the same time, we reject the Biden Administration’s attempt to impose its own ill-conceived and counterproductive AI policies on the American people.”
Geopolitical context rapidly shifting as tariffs and export rules are remade
The Trump administration hasn’t always been friendly to big tech ventures abroad, for instance, restricting the sales of specialized NVIDIA chips to China to balance giving American companies global reach while keeping its best tech out of the hands of its biggest AI rival.
The change may benefit US relations and trade with the EU, many countries of which would have fallen into the second-tier status. Increased openness with Saudi Arabia, which Trump visited on Tuesday, could benefit US tech businesses in the Gulf. In the past, relationships between the Saudi Arabian and US tech trade have been chillier due in part to concerns that chips moved between the countries could leak to China.
