Unlock the White House Watch newsletter for free
Your guide to what Trump’s second term means for Washington, business and the world
The US intends to scrap a rule put in place by the Biden administration that aimed to limit exports of artificial intelligence chips and threatened to weigh on the sales of semiconductor groups such as Nvidia and AMD.
A US official said on Wednesday that the planned regulation, which was due to take effect on May 15, was full of red tape that made it “unenforceable”. Instead, the Trump administration intends to overhaul the rule.
The move by Washington comes as the new administration takes a more lenient approach to the regulation of AI and other advanced technologies domestically and contends with the rise of Chinese companies in the sector.
Changes to the rule, known as the Framework for Artificial Intelligence Diffusion, would represent relief for the likes of Nvidia. The chip powerhouse would otherwise be subject to limits on the amount of AI hardware it could sell in countries such as India, Switzerland and Singapore.
The company has enjoyed sustained and frenzied demand for its graphics processing units, which has propelled it to one of the world’s most valuable companies within just a couple of years.
Instead of allowing the Biden-era controls to take effect in a week, the official said the Trump administration would draft a rule that would ensure that US technology flourished without allowing American adversaries to gain access to the technology. The official cautioned that the rule would not be imminent and would take some time to put in place.
The export controls, introduced in the last days of Joe Biden’s presidency, created a three-tier licensing system for AI chips used in data centres, such as Nvidia’s powerful GPUs.
They were aimed at making it harder for Chinese companies to circumvent US export controls by accessing them via third countries, in a climate of geopolitical rivalry over the infrastructure that powers artificial intelligence.
The planned legislation imposed a cap on chip export volumes for all but a small number of countries, which include G7 members and Taiwan. More than 100 countries fell into this “middle” tier.
The EU, Nvidia and the wider chip and technology industry criticised the rules, which were undergoing an industry feedback period.
The rules, they said, would instead give an advantage to Chinese competitors such as Huawei as they developed and sell their own AI hardware, foregoing an opportunity to ensure that much of the world would rely on American technology.
Nvidia did not immediately respond to a request for comment. The company’s shares closed 3 per cent higher on Wednesday following the news, while AMD added 1.8 per cent.
The most powerful chips from Nvidia are already banned from export to China following successive performance-based restrictions under the Biden administration.
The Trump administration last month introduced new licence requirements for less powerful chips specifically designed for the China market by Nvidia and AMD to comply with export controls.
Nvidia said the ban on its H20 chips resulted in a $5.5bn hit to its earnings.
A broader national security review into potential new semiconductor tariffs is also under way, following a temporary exemption from the most extreme “reciprocal” duties on US trade partners.
Nvidia is set to announce its first-quarter results on May 28.
Additional reporting by Rafe Uddin in San Francisco
