Trump to rescind chip curbs after debate over AI rules
The repeal, which is not yet final, seeks to refashion a policy launched under president Joe Biden that created three broad tiers of countries for regulating the export of chips from Nvidia and others. The Trump administration will not enforce the so-called AI diffusion rule when it takes effect on May 15, the sources said.
The changes are taking shape as US President Donald Trump prepares for a trip to the Middle East, where a number of countries including Saudi Arabia and the United Arab Emirates have bristled at restrictions on their ability to acquire AI chips. Trump officials are actively working towards a new rule that would strengthen the control of chips abroad, according to the sources, who asked not to be identified because the change is not yet public.
Shares of chipmakers rose after Bloomberg News reported on the move. Nvidia climbed 3.1 per cent, and the Philadelphia Stock Exchange Semiconductor Index – a closely watched benchmark – gained 1.7 per cent.
Unveiled during Biden's last week in office, the diffusion rule established new US licensing obligations for AI chip shipments to much of the world as a final salvo after years of escalating restrictions on semiconductor trade. The measure sought to prevent China from acquiring AI chip technology via intermediaries and to bring more nations into the US orbit by setting security requirements to access best-in-class American technology.
'The Biden AI rule is overly complex, overly bureaucratic, and would stymie American innovation,' the Commerce Department's Bureau of Industry and Security said in a statement released by a spokesperson. 'We will be replacing it with a much simpler rule that unleashes American innovation and ensures American AI dominance.'
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The Commerce Department will continue to strictly enforce chip export curbs while it develops a new rule, the sources said. One element of the move to repeal the diffusion rule will be to impose chip controls on countries that have diverted chips to China, including Malaysia and Thailand, one of the sources said.
Nvidia, the leading maker of chips for training AI models, has objected to the growing number of US restrictions. The company has consistently derided the AI diffusion rule and pushed for its wholesale repeal, arguing that restrictions on third countries will only push them closer to China.
Chief executive officer Jensen Huang said this week that US companies should be able to sell into China, which he predicts will become a US$50 billion market for AI chips in the next couple of years.
Still, the Trump administration has stepped up restrictions targeting Beijing's tech ambitions. It already banned Nvidia from selling its H20 chip in China, a move that cost the company US$5.5 billion in writedowns.
Nvidia had no immediate comment.
Repeal of the AI diffusion rule would mark a temporary reprieve for countries such as India and Malaysia, which did not face any chip curbs before January, when Biden unveiled the rule's framework. The Malaysia delay would be a boon to Oracle, which plans a massive data centre expansion there that was set to blow past AI diffusion rule limits.
The Trump administration's move also would be welcome news for countries that were covered by earlier rounds of US restrictions, such as the UAE and Saudi Arabia, but see fresh opportunities to negotiate better terms with the new team in Washington. Those two countries, along with the rest of the Persian Gulf and parts of South-east Asia, have faced chip export controls since 2023 – meaning that an AI diffusion delay alone would not lift licensing requirements on Nvidia sales to data centres there.
Trump has expressed interest in easing restrictions for the UAE, Bloomberg News previously reported, and he could announce the start of work on a government-to-government AI chip agreement when he visits the emirate during a broader Middle East trip from May 13 to May 16. The UAE has been particularly active in pushing for such an accord, and has pledged to invest as much as US$1.4 trillion in US technology and infrastructure over the next decade – a promise that bent the conversation in the country's favour.
Striking accords with the wide range of countries eager to buy Nvidia chips would be a monumental task, and could result in dozens of separate policies by which companies must abide.
The country tiers and associated chip export limits were not the only new policy in the AI diffusion rule. The framework also established export controls for AI model weights, which are the numerical parameters that software uses to process data and make predictions or decisions. The Trump administration's plans for those curbs are under discussion. BLOOMBERG
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