Reversal of Certain Artificial Intelligence Export Control Rules

On May 13, 2025, the Department of Commerce’s Bureau of Industry and Security (BIS) rescinded several aspects of the previously approved artificial intelligence (AI) diffusion rules. BIS also announced additional measures regarding semiconductors.

The previous AI diffusion rules, released on January 15, 2025, introduced a three-tiered structure for managing AI chip exports, with (1) little restrictions on the first-tier allies, (2) moderate restrictions on countries listed in the second tier, and (3) significant restrictions on countries listed under the third tier. Rescinding these restrictions immediately before they were scheduled to become effective on May 15, 2025, means elimination of such three-tier system.

BIS explained that the previous AI diffusion rules would have been too burdensome on certain companies, stifling American innovation and undermining diplomatic relationships with countries in the second tier.

As a result, none of January 2025 AI diffusion rules will be enforced while BIS and the Department of Commerce work on replacement rules. However, BIS continues to restrict China’s access to advanced chips and technology.

In addition to rescinding the AI diffusion rules, BIS announced additional actions to strengthen export controls for AI chips, including:

1. Issuing guidance to the AI industry regarding the risk of using China’s advanced computing integrated circuits and specifically calling out the Huawei Ascend chips. BIS reminds the AI industry that violating export control regulations could result in criminal and administrative penalties.
2. Issuing guidance warning the public about potential consequences of allowing U.S. AI chips to be used in training and interference of Chinese AI models. The guidance indicated there was leeway to obtain BIS authorization to engage in specific transactions or activities, but failure to obtain such authorization could result in civil or criminal enforcement actions. The guidance also aims to protect national security, including assisting with training AI models for military uses for parties headquartered in Country Group D:5, including China and Macau.
3. Issuing guidance to U.S. companies about protecting supply chains against diversion tactics, identifying red flags companies to watch out for, and outlining due diligence measures to take.

BIS makes clear that it remains diligent in protecting U.S. national security and foreign policy interests, especially with its further guidance.