On May 12, 2025, the U.S. Department of Commerce initiated a rescission of the Biden Administration’s AI Diffusion Rule. At the same time, it announced additional steps to strengthen export controls on semiconductors worldwide. The intent of the Biden Administration’s AI Diffusion Rule was to “add a new control on artificial intelligence (AI) model weights for certain advanced closed-weight dual-use AI models.” However, the Department of Commerce spokesperson stated, “The Biden AI rule is overly complex, overly bureaucratic, and would stymie American innovation.”
U.S. chipmakers agree, “They argued it would give an advantage to Chinese competitors, such as Huawei, as they develop and sell their own AI hardware, foregoing an opportunity to ensure that much of the world would rely on American technology. The rule would have affected Nvidia’s ability to sell its high-demand graphics processing units, or GPUs, in markets such as India, Mexico, Singapore, and Switzerland.”
Steps taken by the new administration to strengthen export controls for overseas AI chips include:
- Issuing guidance that using Huawei Ascend chips anywhere in the world violates U.S. export controls.
- Issuing guidance warning the public about the potential consequences of allowing U.S. AI chips to be used for training and interference of Chinese AI models.
- Issuing guidance to U.S. companies on how to protect supply chains against diversion tactics. Recission of AI Diffusion Rule
Although there is a pause, that does not mean there will be a loosening of export controls for U.S. AI chips. There will be a new AI Diffusion Rule sometime soon. Therefore, companies should prepare for new export controls and develop a strategic approach to managing risks when exporting these technologies overseas. The Trump Administration Under Secretary of Commerce for Industry and Security advised that the administration’s strategy is to share American AI technology with trusted foreign countries worldwide, while keeping the technology out of the hands of our adversaries.