Trump Moves to Overhaul Biden’s AI Chip Export Rules: What’s at Stake for the Semiconductor Industry

The Trump administration is preparing to rescind a major Biden-era regulation—known as the AI Diffusion Rule—which was set to take effect May 15 and would have sharply limited the export of high-performance artificial intelligence (AI) chips to a broad range of countries. The rule had sparked intense backlash from U.S. semiconductor firms, including Nvidia and AMD, as well as concerns from foreign governments and tech partners. While the immediate reaction from chip stocks has been positive, the implications of Trump’s proposed replacement regime remain far from certain—and could ultimately prove even more restrictive, albeit in different ways.

What the Biden Rule Did

The AI Diffusion Rule was one of the most sweeping tech export controls introduced in the waning days of the Biden administration. It divided the world into three export tiers:

• Tier 1: The U.S. and close allies, including the G7 and Taiwan, faced no limits on AI chip imports.
• Tier 2: Roughly 120 countries—including major non-aligned economies like India, Mexico, and the UAE—were subject to quantitative limits on AI chip purchases.
• Tier 3: Countries considered adversaries (e.g., China, Russia, Iran, North Korea) were banned outright from receiving these chips.

The regulation targeted AI accelerators such as Nvidia’s H100 and AMD’s MI300, which are critical to training and deploying large language models and other machine learning systems. Biden officials designed the rule to prevent circumvention of China export bans by blocking indirect routing through Tier 2 countries.

Why Trump Plans to Scrap It

A Commerce Department spokeswoman under Trump called the Biden rule “overly complex, overly bureaucratic, and unenforceable.” Trump administration officials argue that the tiered system creates red tape for U.S. exporters, harms competitiveness, and ultimately fails to prevent adversaries from acquiring U.S. chips via third-party re-exporters. Instead of a universal framework, the administration intends to pursue a bilateral licensing regime that negotiates chip access country-by-country—starting with nations such as Saudi Arabia and the United Arab Emirates.

While this pivot may reduce regulatory drag on companies like Nvidia and AMD in the short term, the lack of clarity about what comes next has tempered optimism. Industry figures and analysts warn that the replacement rule could take months to finalize and might still impose significant export restrictions—potentially even stricter ones aimed at direct national-security risks.

Who Benefits and Why

The most obvious beneficiaries of the rollback are U.S. chipmakers:

• Nvidia (NVDA): The company’s stock rose over 3% after the news broke. It faced a $5.5 billion revenue hit from restrictions on its H20 chip, which was designed specifically for the Chinese market. CEO Jensen Huang warned that losing access to China’s AI sector would be a “tremendous loss.”
• AMD (AMD): Also up nearly 2%, AMD was similarly impacted by Biden-era constraints. CEO Lisa Su reiterated the need to balance national security with competitiveness.
• Broadcom (AVGO) and others supplying AI infrastructure also saw gains.

This about-face is a temporary reprieve for tech firms that rely heavily on sales to Tier 2 countries, many of which are friendly to the U.S. and have booming AI ambitions. The rescission removes the immediate compliance burden and restores access to large swaths of the global market, at least until new rules are issued.

What Happens Next

Trump’s plan isn’t finalized. The administration has only announced that it won’t enforce the Biden-era framework as planned. Instead, it will develop a new set of controls—likely more tailored and potentially more diplomatically sensitive—via direct negotiations. This includes putting export restrictions on the table in broader trade talks and requesting formal assurances from partners to prevent chip leakage to adversaries like China.

But that flexibility also introduces uncertainty. Commerce officials have not released a timeline, and insiders say that internal debates are ongoing. Industry leaders remain concerned that ad-hoc bilateral deals could slow sales, inject geopolitical instability into the export process, and ultimately offer no better safeguards than the original rule.

Moreover, separate rulemaking efforts are already under way at the Bureau of Industry and Security (BIS) to prevent chip diversion to China. That includes:

• New licensing alerts for countries using Huawei-made AI chips.
• Warnings that training Chinese AI models with U.S. chips could violate export controls.

These parallel efforts could result in harsher enforcement down the line, even if the diffusion rule itself is scrapped.

A Temporary Win, But No Clear Victory

While chip stocks are breathing a sigh of relief, the situation is far from resolved. Trump’s rescission of the AI diffusion rule removes an immediate overhang, but the administration’s preference for bilateral diplomacy and its tougher rhetoric on national security means the replacement could be just as restrictive—if not more so.

In short, this is a policy reset, not a deregulation. Until the new framework is formalized, the semiconductor industry will continue to operate in a climate of strategic ambiguity, with both opportunity and risk coexisting on the same export license.