The Trump administration reportedly has revoked the AI Diffusion Rule just one week before it was set to take effect. The rule, issued in the final weeks of the Biden administration, would have significantly expanded export license requirements for AI chips, applying them broadly to nearly all countries to prevent diversion to China.
The Diffusion Rule had established tiers of national eligibility, limiting the access of AI aspirants like the UAE & Saudi Arabia. As the President heads to the Saudi this week, scrapping the rule will certainly please his hosts. Bloomberg reports that the president may announce an AI chip agreement with Middle Eastern governments during his trip.
The Trump administration plans to revise the rule to simplify its structure, with reports indicating possible replacement via bilateral agreements. No official replacement framework has yet been announced.
Nvidia, the leading U.S. AI chipmaker, praised the move in a statement, calling it “a once-in-a-generation opportunity” to bolster domestic manufacturing, jobs, and global leadership. CEO Jensen Huang, who met with President Trump last week at the White House, confirmed plans to produce $500 billion in AI systems in the U.S. through partnerships with TSMC, Foxconn, Wistron, Amkor, and SPIL. Current chip production and packaging are already underway in Arizona and Texas.
Anthropic has submitted formal comments supporting and recommending enhancements to the Department of Commerce’s “Framework for Artificial Intelligence Diffusion,” asserting that maintaining America’s lead in advanced AI compute is critical to national security and economic strength.
The company backs the framework’s core structure—global export controls on AI chips and a three-tier country risk classification—but urges reforms in three key areas:
Revise Tiering Criteria: Allow Tier 2 countries with strong data center safeguards to access more chips via government-to-government arrangements that mitigate diversion risks.
Lower License-Free Thresholds: Reduce the current 1,700-chip limit for Tier 2 countries to close potential smuggling loopholes.
Boost Enforcement Funding: Expand resources for the Bureau of Industry and Security to enhance implementation and oversight.
Anthropic argues that export controls are working: Chinese AI firms like DeepSeek report diminished performance due to chip shortages. Without robust restrictions, Anthropic warns that AI infrastructure could migrate overseas, replicating strategic losses seen in solar and battery manufacturing.
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