The Trump administration is poised to dismantle key aspects of the Biden administration´s ´AI diffusion´ framework, which governs international exports of advanced semiconductors and Artificial Intelligence technology. Instead of maintaining the current system that categorizes roughly 120 countries into three tiers with varying export caps, the US will pursue bilateral licensing agreements with partner nations such as the United Arab Emirates and Saudi Arabia. This approach is designed to streamline compliance and grant the US increased flexibility to tailor contracts based on strategic relationships.
Despite these sweeping regulatory changes, Washington´s position on China will remain resolute, with a continued—and potentially strengthened—ban on shipments of advanced chips to China, Russia, Iran, and North Korea. Additionally, the administration is considering stricter measures to curb sanctioned-reexports, including lowering the notification threshold on GPU shipments from 1,700 to about 500 NVIDIA H100 equivalents. This move aims to target loopholes that have previously enabled smuggling networks to divert US-origin technologies to Chinese Artificial Intelligence and military programs. Enhanced scrutiny will also be applied to countries with histories of rerouting US semiconductors to prohibited destinations.
Reactions within the semiconductor industry have been largely positive, with chipmakers experiencing rising share prices as prospects increase for simplified regulations and reduced compliance burdens. Nevertheless, governments in Southeast Asia and Eastern Europe are calling for clear guidance to ensure a smooth transition and avoid potential market volatility. The outgoing ´AI diffusion´ rule, first introduced in January 2025, was widely criticized for hampering innovation and diplomatic engagement due to its complexity. The forthcoming reforms promise to link chip access to strategic investments and trade incentives, reflecting a shift to outcome-oriented, case-specific diplomacy. An official announcement is expected ahead of President Trump´s upcoming Middle East visit, with final regulatory details anticipated in the following weeks.
