The U.S. government plans to rescind and revise a key Biden-era rule that restricted the export of sophisticated artificial intelligence (AI) chips, a spokesperson for the Department of Commerce confirmed on Wednesday.
“The Biden AI rule is overly complex, overly bureaucratic, and would stymie American innovation,” the spokeswoman said, adding, “We will be replacing it with a much simpler rule that unleashes American innovation and ensures American AI dominance.”
The regulation, known as the Framework for Artificial Intelligence Diffusion, was issued in January, just one week before the end of the Biden administration. It marked the culmination of a four-year effort to prevent China from acquiring cutting-edge chips that could enhance its military capabilities, while safeguarding U.S. dominance in AI, according to Reuters.
The framework divided the world into three tiers. The first tier included 17 countries and Taiwan, which were permitted unlimited access to AI chips. The second tier, comprising about 120 nations, was subject to export caps. The third tier—featuring nations deemed security threats, including China, Russia, Iran, and North Korea—was completely blocked from receiving the advanced technology.
According to the Commerce Department spokeswoman, the tiered system was deemed impractical and difficult to enforce. Officials “didn’t like the tiered system,” she pointed out, describing the rule as “unenforceable.” She added that discussions are ongoing regarding the best path forward, and no specific timeline has been set for unveiling the revised regulation.
The Biden-era rule had been slated to take effect on May 15.
Trump Admin Proposes Global Licensing Model
In recent months, the Trump administration began working on revisions that could overhaul the framework. One option under consideration is eliminating the tiered structure altogether and introducing a global licensing regime, backed by bilateral government-to-government agreements. This model would standardize access to AI chips globally, rather than segmenting the world into access tiers.
Chipmakers Oppose Export Limits
Major U.S. chip manufacturers had voiced opposition to the rule, warning of its potential to damage the industry.
AMD CEO Lisa Su emphasized the need for balance. Speaking to CNBC on Wednesday, Su said the U.S. should protect national security without stifling the chip industry’s growth.
Nvidia CEO Jensen Huang echoed those concerns earlier this week, cautioning that excluding U.S. firms from the Chinese AI market would be a “tremendous loss.”
“With the AI Diffusion Rule revoked, America will have a once-in-a-generation opportunity to lead the next industrial revolution and create high-paying U.S. jobs, build new U.S.-supplied infrastructure, and alleviate the trade deficit,” an Nvidia spokesperson stated Wednesday.
Nvidia shares rose 3% on Wednesday following news of a potential rule change that could boost its AI chip exports but slipped 0.7% in after-hours trading.
