US quietly withdraws draft rule on AI chip exports after internal debate

The US commerce department has withdrawn a planned rule on AI chip exports, shelving a proposal that would have reached deep into the global market for the hardware behind the AI boom.

The notice appeared on a government website on Friday, Reuters reported. There was no explanation and no immediate comment from the department. On paper, it was a brief bureaucratic step. In practice, it leaves a large hole in Washington’s attempt to decide who should get access to the most sought-after American chips, and under what conditions.

That uncertainty has been building for months. The Trump administration had already scrapped the Biden-era AI diffusion rules and said it would come back with a different approach. This draft was meant to show what that approach might look like. Instead, it has been pulled back before officials even got to the point of publicly defending it.

What made the proposal worth watching was how far it seemed willing to go. There were reports earlier this month that US officials were debating a framework that would not simply police sales to obvious adversaries. It would also reach into dealings with allies and partners. Foreign governments seeking the biggest shipments of advanced AI chips could have been asked to invest in US AI data centres or offer security guarantees. Even installations of fewer than 1,000 chips could have required a licence.

That is a striking threshold. It suggests the administration was considering a system that treated powerful chips less like a normal export and more like a strategic asset that needed watching almost from the moment it crossed a border.

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Moreover exporters such as Nvidia and AMD could have been required to monitor some sales after delivery. Buyers could also have been asked to use software designed to stop those chips from being linked together into larger clusters, the dense pools of computing power that matter most for training and running advanced AI systems.

These firms were seeking up to 100,000 chips that would need government-to-government assurances, while installations of up to 200,000 chips could have triggered visits from US export control officials.

There was a logic to it. Washington is trying to stop advanced computing power from leaking to China, whether directly or by detour. But the breadth of the draft also raised another possibility, that export controls were becoming a negotiating tool as much as a security measure.

Saif Khan, a former Biden administration national security official now at the Institute for Progress, told Reuters the rule could help address diversion to China, but warned the licensing requirements looked overly broad and risked turning restrictions into leverage with allies.

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That may be the real tension underneath the withdrawal. The commerce department had already signalled that it did not want to recreate Biden’s old framework. When Reuters first reported on the draft, the department said it was discussing a new system but would not return to what it called the previous administration’s burdensome diffusion regime. Instead, it pointed to the approach used in deals with Saudi Arabia and the United Arab Emirates, where access to US chips was tied to a wider bargain.

The proposal was withdrawn, but not the underlying struggle. As the US still wants to keep the most advanced AI chips out of hostile hands. It still wants influence over where the next generation of AI infrastructure is built. What it has not yet shown is whether it plans to do that through a stable set of rules or through one-off deals made in the heat of politics.