U.S. officials are drafting new AI chip export rules that would require foreign governments and companies to make investment pledges or security commitments to obtain large shipments of advanced AI chips from U.S. firms like Nvidia and Advanced Micro Devices (AMD). The proposed framework, under review by the Trump administration, aims to expand the control beyond the current country-specific restrictions to a global licensing system.
Commerce Department Signals Possible Changes to Framework
The policy would apply to exports of 200,000 AI chips or more, potentially giving the U.S. government greater leverage when negotiating technology partnerships and infrastructure investments, and would require foreign entities to seek permission from the U.S. Department of Commerce for virtually all exports. Although the framework is under internal review and could be altered, it marks the first major attempt by the current administration to redefine AI chip export regulations since rules were rolled out. If the regulations take effect, it could stunt the AI-centric growth of Nvidia, AMD, and others.
The U.S. government has already imposed restrictions on the countries it deems a threat to national security. These countries include China, Russia, North Korea, and Iran, among others. Lately, Trump permitted ‘small amounts’ of Nvidia’s H200 chips with a 25% tariff to China. It’s nearly a year since the back-and-forth began, and sales of chips to China haven’t yet resumed. NVIDIA’s experience in China serves as a stark reminder of what is at stake.
The U.S. Department of Commerce posted on X that, although the discussions are underway, if enacted, it would avoid the “burdensome, overreaching, and disastrous” framework previously proposed.
Following the news, investors’ nerves are already visible in the market this morning, with Nvidia’s stock falling 0.67% in the pre-market trading at $182.10. AMD closed down 1.3% at $199.45, but in the after-hours trading, the stock rose 0.33% to trade at $200.10. These early movements suggest that investors are responding cautiously to the uncertainty surrounding the proposed regulations.
Monitoring Requirements for AI Chip Usage
Under the draft proposal, even a smaller deployment involving fewer than 1,000 AI chips might require export licenses. To qualify for exemptions, exporters like Nvidia or AMD are required to monitor how the chips are used, while buyers would need to install software preventing the chips from being linked into large computing clusters, which are usually used to power AI supercomputers and large-scale machine learning systems.
Strangely, the draft framework has not addressed the weights of AI model exports, which are the core parameters that power advanced AI systems developed by companies like OpenAI and Anthropic. While previous proposals under the Biden administration have attempted to regulate these parameters to ensure that cutting-edge AI models are deployed only in trusted environments.
Potential Global Impact on AI Development
The White House, Nvidia, or AMD have not yet released any detailed comments on the proposal. However, the policy is not a full export ban but a strategic tool to leverage access to AI chips in exchange for economic and security cooperation, modeled after the recent deals with Saudi Arabia and the UAE, where both countries signaled their commitment to invest in U.S. technology infrastructure as part of deals to obtain advanced chips.
While smaller transactions may proceed with minimal delays, large international data center projects could face significant hurdles; if enacted, such regulations could nonetheless reshape the development of AI globally. But if it becomes harder to source chips from the U.S., companies may increasingly turn to alternative sources, especially in a scenario where chip firms outside the U.S. are continuing to develop more advanced chips.
