The Commerce Department’s Bureau of Industry and Security (BIS) this week scrapped the Biden administration’s Artificial Intelligence Diffusion Rule 48 hours before it would have kicked in, citing “burdensome” widespread regulatory requirements.
But the Trump administration isn’t abandoning the crackdown on cutting-edge chips and the AI models they enable. Instead, as three new BIS guidance documents show, it appears to be taking narrower aim at China’s access in particular.
For context: The AI Diffusion Rule, issued in the final days before then-President Biden left office in January, would have imposed a worldwide, three-tier licensing framework on shipments of high-end chips and certain AI models starting Thursday. The Biden administration had called the measures “necessary to protect U.S. national security and foreign policy interests.”
Some AI companies, most notably Nvidia, spoke out against the rule.
The pivot: In a news release Wednesday, BIS aligned with industry criticisms, saying the rule “would have stifled American innovation,” as well as “undermined U.S. diplomatic relations with dozens of countries by downgrading them to second-tier status.”
It said that BIS would publish a formal rescission of the rule and, in the meantime, had instructed officials not to enforce it.
State of play: BIS paired the rescission with three new advisories:
Industry will have to be proactive in screening against counterparties for hidden Chinese ownership, verifying end-use and end-user attestations, and developing knowledge around Chinese military-intelligence end users to infer risks.
But the Trump administration isn’t abandoning the crackdown on cutting-edge chips and the AI models they enable. Instead, as three new BIS guidance documents show, it appears to be taking narrower aim at China’s access in particular.
For context: The AI Diffusion Rule, issued in the final days before then-President Biden left office in January, would have imposed a worldwide, three-tier licensing framework on shipments of high-end chips and certain AI models starting Thursday. The Biden administration had called the measures “necessary to protect U.S. national security and foreign policy interests.”
Some AI companies, most notably Nvidia, spoke out against the rule.
The pivot: In a news release Wednesday, BIS aligned with industry criticisms, saying the rule “would have stifled American innovation,” as well as “undermined U.S. diplomatic relations with dozens of countries by downgrading them to second-tier status.”
It said that BIS would publish a formal rescission of the rule and, in the meantime, had instructed officials not to enforce it.
State of play: BIS paired the rescission with three new advisories:
- “Policy Statement on Controls that May Apply to Advanced-Computing ICs & Other Commodities Used to Train AI Models,” which warns that any U.S. chips or cloud services used to train or run AI models for Chinese-headquartered models may require a license if the exporter has “knowledge”—based on public information or customer-provided facts—that the activity is linked to military-intelligence or WMD end uses.
- “Guidance on Application of General Prohibition 10 to PRC Advanced-Computing Integrated Circuits,” which effectively makes Huawei’s Ascend-series chips radioactive by warning that even storing or servicing them is presumptively illegal because they probably were built with U.S. tech without permission.
- “Industry Guidance to Prevent Diversion of Advanced Computing Integrated Circuits,” a hands-on checklist of 11 red flags and seven due-diligence steps—from identifying corporate ownership structure and company profiles, to identifying residential delivery addresses, to examining data-center capabilities—that compliance teams can use to detect diversion of advanced computing ICs and commodities.
Industry will have to be proactive in screening against counterparties for hidden Chinese ownership, verifying end-use and end-user attestations, and developing knowledge around Chinese military-intelligence end users to infer risks.
