AI Diffusion Rule is Dead
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What the AI Diffusion Rule Was About and What Its Repeal Means
The AI Diffusion Rule, rolled out by the Biden administration in January 2025, was all about controlling how advanced AI tech—think powerful chips and AI model weights—gets shared globally. Its main goal was to keep the U.S. at the top of the AI game while making sure the tech didn’t end up in the wrong hands. It split countries into three tiers: Tier 1 (like Japan and Canada) got free access; Tier 2 (around 150 countries) had caps on imports (e.g., 49,901 H100-equivalent GPUs until 2027); and Tier 3, mainly China, faced tight restrictions to stop AI being used for things like military projects. The rule used licences and security checks to manage who got what, aiming to spread AI responsibly without risking security.
Now, word on street suggests the Trump administration is scrapping this rule. If true, this could mean U.S. companies like NVIDIA can sell chips more easily to Tier 2 countries and maybe even China, though other security laws might still apply.
For businesses, it’s a win—fewer hoops to jump through, more markets to tap, and potentially faster AI growth worldwide. But there’s a flip side: without the rule, there’s a chance AI tech could slip to places like China through backchannels, boosting their AI power in ways the U.S. might not like. With no clear replacement policy yet, things are a bit up in the air. It’s a move towards a freer market, but we’ll need more details to see how it plays out.
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Semiconductor stocks are up
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Interesting update which is a big positive for companies like Oracle. 'You can have our tech if we manage it' -seems to be a link to Stagate/open AI for countries.
Quoted from a news wire below
New AI Diffusion Rule is COMING SOON and New Version Will Let Allies Buy US Chips With Conditions
The Commerce Department is drafting a replacement for its recently repealed AI diffusion rule to ensure the new controls don’t impede U.S. exports to allies, Commerce Secretary Howard Lutnick said June 4.
“Our view is we are going to allow our allies to buy AI chips provided they’re run by an approved American data center operator and the cloud that touches that data center is an approved American operator, so we control it while it’s over there,” Lutnick testified before the Senate Appropriations Subcommittee on Commerce, Justice and Science.
The rule that was rescinded last month (see 2505130018) was “very confusing,” Lutnick said. “For example, the prime minister of Poland hunted me down and said, ‘What did I ever do to you that you have me as a Tier 3’ country, the most stringent of three tiers? ‘I’m part of Europe -- what are you doing?’ It was illogical. It was hastily rushed through at the very end of the Biden administration.”
He expects Commerce will release the new AI diffusion rule soon. “I can’t say with more specificity but pretty soon,” he said.