Trump Admin Mulls AI Chip Rule Shake-up, Potentially Scrapping Tier System for Global Licensing Regime
Trump administration officials consider altering Biden's AI chip export regulations, according to insiders.
In a fresh twist, the Trump administration is contemplating revising a previous rule enacted during the Biden era that restricts global access to cutting-edge AI chips [1]. Rumors swirl that they might even scrap the tier-based system, replacing it with a worldwide licensing framework backed by government-to-government agreements [2][3].
Currently, the rule keeps the world segmented into three tiers:- The first tier, including Taiwan and seventeen nations, enjoys unlimited AI chip access.- The second tier, comprising over 120 countries, is subject to limitations on AI chips availability.- Lastly, nations like China, Russia, Iran, and North Korea are barred from accessing them [2].
If the tier system is removed, the new global licensing regime could pave the way for a statecraft upgrade by making AI chips a more influential bargaining chip in international trade talks.
Notable trade guru Wilbur Ross, who once helmed the Commerce Department under Trump, hinted there were discussions about giving the tier system a pass. Although, he clarified that the decision was still in the air [2]. If implemented, this distinct approach might align with Trump's broader trade strategy, as it would make it easier to negotiate resource access with individual nations [2].
Under the proposed changes, U.S. Commerce Secretary Howard Lutnick's push to incorporate export controls into trade talks could become more prominent [3].
One of the possible amendments involves reducing the threshold to exempt certain orders from licensing requirements - possibly from the current limit of approximately 1,700 Nvidia Corp's powerful H100 chips to as low as 500 [1]. Current regulations put orders under this threshold under government notice but don't require a license [1].
When contacted, neither the Commerce Department nor the White House provided an official comment [1].
Modeling the rule on government-to-government agreements may generate controversy, with experts suggesting these changes could lead to a more complex regulatory landscape [1].
Critics of the existing rule, such as Oracle Corp's executive vice president Ken Glueck, argue that the tiered system is illogical, given that Israel and Yemen, for instance, are both part of the second tier [1]. Despite ignorance about the Trump administration's specific plans, Glueck anticipates a significant modification of the rule [1].
Both Oracle and Nvidia, amongst U.S. tech companies, have expressed concerns about the original rule, stating that it would incentivize countries, particularly those in the second tier, to turn towards unregulated Chinese alternatives [1]. Seven Republican senators voiced their concerns, too, writing a letter to Commerce Secretary Lutnick, urging the withdrawal of the rule [1].
Should the Trump administration decide to proceed with these adjustments, they could alter the global landscape of AI chip distribution, moving towards more tailored, bilateral agreements that bolster America's negotiating power.
- The Trump administration is considering discarding the tier-based system for global AI chip access and replacing it with a universal licensing framework backed by government-to-government agreements.
- If implemented, this new regulation could make AI chips a more significant factor in international trade negotiations, potentially serving as a formidable bargaining chip.
- Under the proposed changes, the current limit for orders that evade licensing requirements might be reduced from around 1,700 Nvidia Corp's H100 chips to as few as 500.
- Changes to the AI chip rule could lead to a more intricate regulatory landscape, sparking debate among experts, with Oracle Corp's executive vice president, Ken Glueck, anticipating significant modifications to the rule.
