"AI Technology Export Restrictions Temporarily Lifted, Yet Updated Guidelines Increase Potential Peril for AI-Linked Exports in the United States"
In a significant shift, the Trump Administration's Department of Commerce (through BIS) has rescinded the Biden-era AI Diffusion Rule, which introduced new export licensing requirements for advanced AI model weights and high-performance computing semiconductors. This move ends the tiered, risk-based export control framework that would have required licenses based on the sensitivity of AI technology and destination countries.
The new policy, aimed at promoting "bold, inclusive" AI export engagement with trusted countries, strengthens export controls against adversaries, particularly targeting Chinese advanced computing ICs such as Huawei Ascend chips. This change means that the previously planned burdensome licensing requirements and restrictions on exporting advanced AI chips and models to a broad range of countries have been rescinded and are currently not enforced.
However, BIS is reinforcing controls to prevent US AI technology from being used in Chinese AI systems egregiously. The Administration has issued guidance on supply chain protections and risks associated with Chinese chips. Moreover, it has indicated that a new replacement export control rule will be issued in the future, but at present, US exporters enjoy somewhat relaxed licensing burdens compared to the Biden rule.
Key impacts for US companies include:
- No current enforcement of the Biden-era AI Diffusion licensing regime originally planned for May 2025.
- Continued restrictions and guidance on exporting AI chips to adversarial countries like China remain strong, including risks from Huawei Ascend chips.
- Industry guidance aims to prevent export diversions and unauthorized uses of US AI tech abroad.
- Anticipation of a forthcoming replacement BIS rule means companies should stay alert to new licensing requirements.
- The Administration's approach seeks to balance openness with allies and partners while targeting US adversaries with enhanced controls.
The new BIS guidance contains a non-exhaustive list of "red flags" and recommended due diligence practices to help companies evaluate potential export control evasion with respect to advanced computing ICs. BIS has identified specific new thresholds for concern, including probing whether data centers have the infrastructure to operate servers containing advanced ICs greater than 10 megawatts.
BIS has warned the industry that Huawei Ascend ICs were improperly manufactured in violation of US export controls, and any purchase or use of these ICs would violate the EAR's General Prohibition 10 (GP 10). The BIS guidance states that activities prohibited by GP 10 "could result in substantial criminal and administrative penalties," including "imprisonment, fines, loss of export privileges, or other restrictions."
The rescission of the AI Diffusion Rule was not a surprise, as it was an ambitious effort by the Biden Administration to stymie US adversaries' efforts to develop advanced AI models. The BIS guidance establishes that the Huawei Ascend chip falls within the ambit of GP 10 because the items are captured by the Foreign Direct Product Rule or may have otherwise been produced, purchased, or ordered by a prohibited Entity List designee.
Legal experts, such as WilmerHale, will closely monitor any regulatory developments related to AI-related technologies, including potential reimpositions of controls on exports of closed model weights and any new restrictions on open model weights. As the situation evolves, US companies should remain vigilant and stay informed about the latest developments in AI export licensing requirements.
- The new BIS guidance focuses on strengthening export controls, particularly targeting Chinese advance computing ICs such as Huawei Ascend chips, within the industry of technology, which includes artificial-intelligence.
- The Administration's approach to AI export regulation aims to balance openness with allies and partners while targeting US adversaries with enhanced controls in the finance and technology industries, with specific attention paid to advanced computing ICs.
