Trump administration to rescind and replace Biden-era global AI chip export curbs

By Karen Freifeld and Arsheeya Bajwa

(Reuters) -U.S. President Donald Trump's administration plans to rescind and modify a Biden-era rule that curbed the export of sophisticated artificial-intelligence chips, a spokeswoman for the Department of Commerce said on Wednesday.

The regulation was aimed at further restricting AI chip and technology exports, dividing up the world to keep advanced computing power in the United States and among its allies while finding more ways to block China's access.

The Framework for Artificial Intelligence Diffusion was issued in January, a week before the end of the administration of former President Joe Biden. It capped a four-year effort by the Biden administration to hobble China's access to advanced chips that could enhance its military capabilities and to maintain U.S. leadership in AI.

"The Biden AI rule is overly complex, overly bureaucratic, and would stymie American innovation," the Commerce spokeswoman said. "We will be replacing it with a much simpler rule that unleashes American innovation and ensures American AI dominance."

Last week, Reuters reported the Trump administration was working on changes to the rule that would limit global access to AI chips, including possibly doing away with its splitting the world into tiers that help determine how many advanced semiconductors a country can obtain.

According to the Commerce spokeswoman, officials "didn't like the tiered system" and said the rule was "unenforceable." The spokeswoman did not have a timetable for the new rule. She said debate was still under way on the best course of action. The Biden rule was set to take effect on May 15.

Shares of Nvidia, an AI chip designer whose sales could rise if the rule were changed to increase exports, ended 3% higher after the news came out on Wednesday, but then dipped 0.7% in after-hours trade.

The Biden rule divided the world into three tiers: 17 countries and Taiwan were in the first tier, which could receive unlimited chips. Some 120 other countries were in the second tier, which was subject to caps on the number of chips the countries could receive. In the third tier, countries of concern including China, Russia, Iran and North Korea were blocked from the chips.

But Trump administration officials are weighing discarding the tiered approach to access in the rule and replacing it with a global licensing regime with government-to-government agreements, sources told Reuters last week.

(Reporting by Arsheeya Bajwa in Bengaluru and Karen Freifeld in New York; Editing by Anil D'Silva, Chris Sanders and Matthew Lewis)