US Commerce Department Reverses AI Chip Export Rule in Eleventh-Hour Move
In an eleventh-hour flip-flop, mere days before a broad new rule on artificial intelligence chip exports became law, the U.S. Department of Commerce (DOC) made a reversal. The move recoils from the Biden administration's "Artificial Intelligence Diffusion Rule," with people left puzzling over what the future of U.S. policy in the important tech field holds.
The Details of the Scrapped Rule
The rule, originally rolled out by then-President Joe Biden in January and scheduled to take effect on May 15th, was meant to place additional constraints on exporting U.S.-produced AI chips to nearly all nations, along with tightening existing limits. It had proposed a system that was tiered across countries:
- Tier 1 countries (like Japan and South Korea): No new export headaches.
- Tier 2 nations (like Portugal and Mexico): They would have been introduced to fresh limitations in terms of importing AI chips for the very first time.
- Tier 3 countries (like Russia and China): Far stricter regulation than before.
The Path Forward: A Change of Direction
The DOC has instructed its staff not to implement the Biden-era regulation. While a direct replacement regulation can be expected in the future, the short-term approach seems to be shifting. Instead of general, blanket restrictions, future policy might move in the direction of direct negotiation with targeted countries, as suggested by reporting by Bloomberg.
In the meantime, the DOC has issued some fresh guidance for the tech industry. They've strongly reminded companies that using Huawei’s Ascend AI chips anywhere globally is a violation of U.S. export rules. There's also a clear warning about the risks of allowing U.S. AI chips to be used for training AI models in China and advice on how to protect chip supply chains from being secretly diverted.
A New Tone of Leadership in Commerce
U.S. Under Secretary of Commerce for Industry and Security, Jeffrey Kessler, offered some insight into administration thought.
"The Trump Administration will take a bold, inclusive strategy on American AI technology with trusted countries around the world, while preventing the technology from falling into the hands of our competitors," he stated. He also directly criticized the previous government's policy, saying, "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."
The New Focus: China and Huawei's AI Muscle
It seems the new strategy, guided by the Bureau of Industry and Security (BIS), will target China's rising AI capabilities. Despite U.S. export control, China has witnessed robust AI growth, and companies like DeepSeek and Huawei have been advancing significantly in software and hardware both.
The new AI Diffusion Rule, when it arrives, will probably have a couple of priority targets:
- Restraining Huawei's Ascend Chips: The fact that they are now being spoken of in official reports is precisely what highlights how important Huawei's AI hardware has become. It appears the aim is to curb their influence outside China.
- Tracking U.S. Chips Utilized in Chinese AI Training: Closely observing the use of U.S. AI chips, especially those from companies like NVIDIA, to train AI models in China is also likely to occur. Adding tracking capabilities or "kill switches" to chips is even being discussed, something already being contemplated in the U.S. Senate.
While the new rule is not as sweeping as that envisioned in the Biden proposal, the stated aim is to prevent Huawei from expanding its presence in the world market, which would be a direct threat to the existing players like NVIDIA. The global chess game for AI dominance continues with the U.S. shifting its strategy in real time.
