Donald Trump Plans Overhaul of Semiconductor Export Policy, Tightens Focus on China

• The Trump administration will repeal Biden’s three-tier AI policy that categorized countries based on their strategic alignment with the U.S.
• Instead of broad controls, the new policy will reportedly prioritize one-on-one negotiations with strategic nations like Saudi Arabia.
• The rollback follows strong criticism from major U.S. chipmakers like Nvidia, who argued the Biden-era rule stifled innovation.

The Trump administration is preparing to repeal Biden’s regulatory measure on AI chip exports as part of a broader effort to reshape global semiconductor trade.

The significant shift in strategy for regulating AI is seen as a potential victory for American semiconductor makers who have long criticized the policy.

Trump’s Semiconductor Overhaul

Originally due to take effect on May 15, the Trump administration will no longer enforce the Biden administration’s three-tier export control framework for advanced U.S. semiconductors.

In its place, a new regulatory policy is reportedly being drafted , emphasizing negotiations with Saudi Arabia and other strategic nations.

The Biden-era framework categorized countries into three tiers based on their strategic relationship with the U.S., offering near-unrestricted access to allies like the U.K. (Tier 1), while banning exports to adversaries like China (Tier 3).

However, now the Trump administration plans to abandon this structure.

The administration’s new export control strategy will reportedly focus on bilateral agreements, particularly with nations like Saudi Arabia.

“The Biden AI rule is overly complex, overly bureaucratic, and would stifle American innovation,” the Commerce Department’s Bureau of Industry and Security said in a statement to Reuters.

“We will be replacing it with a much simpler rule that unleashes American innovation and ensures American AI dominance,” they added.

The AI Diffusion Rule

Commonly called the “AI Diffusion Rule,” the Biden-era regulation was designed to safeguard U.S. high-performance AI technology from falling into adversaries’ hands.

It required companies to implement strict security protocols, including detailed record-keeping and compliance reporting.

Critics argued the policy imposed excessive red tape, limiting U.S. competitiveness in a fast-moving global market.

The policy faced opposition from major chipmakers, including Nvidia , which argued that the rule hindered domestic innovation.

Nvidia recently criticized Amazon-backed AI startup Anthropic for defending the regulation.

“American firms should focus on innovation and rise to the challenge, rather than tell tall tales that large, heavy, and sensitive electronics are somehow smuggled in ‘baby bumps’ or ‘alongside live lobsters,’” a spokesperson for Nvidia said.

China Remains the Central Concern

The core of the regulatory debate centers on preventing U.S. technology from reaching China.

Since 2022, the U.S. has introduced increasingly stringent measures aimed at curbing China’s access to advanced AI technologies.

The AI Diffusion Rule, issued during Biden’s final week in office, expanded these restrictions globally.

The policy barred direct exports and indirect transfers and re-exports of sensitive AI-related components to China, even when routed through third countries.

Despite opposition to the rule, the Trump administration has signaled that it still plans to enforce strict measures against countries like Thailand that have allegedly diverted semiconductors to China.