The United States has officially revoked the controversial “AI diffusion rule” that previously restricted the export of advanced AI chips.
This policy change is expected to immediately benefit the U.S. technology sector, which plays a critical role in the national economy.
United States Officially Revokes the Controversial “AI Diffusion Rule”
The rule’s removal enables countries like India to gain greater access to Nvidia chips without arbitrary restrictions.
David Sacks, the new White House lead on AI policy, announced the rollback during the Saudi-US Investment Forum, saying: “The Trump administration has just announced that we will be rescinding what’s known as the Biden diffusion rule… it literally restricted the diffusion or proliferation of American technology all over the world.”
The AI diffusion rule was introduced in the final days of the Biden administration as part of efforts to limit China’s access to advanced AI technology.
The rule categorized countries into three tiers and placed limits on AI chip exports, even to non-adversarial nations.
Although the rule never fully took effect, it sparked concern among global governments and semiconductor companies.
President Donald Trump’s administration has now officially canceled the rule, viewing it as a step toward strengthening alliances.
The reversal is intended to ensure that U.S. technology doesn’t fall into the hands of adversaries like China, but without alienating allies.
The Biden-era policy faced criticism for applying a broad and insensitive approach by treating friendly nations—like Mexico, Portugal, and India—as “second-tier” countries.
These nations were to face chip import quotas that would have hampered their AI growth.
Nvidia and AMD Opposed the Policy
Leading chipmakers such as Nvidia and AMD argued the policy was harmful to business and might drive allies toward China for technology alternatives.
Under Secretary of Commerce Jeffrey Kessler criticized the old policy, stating: “We reject the Biden administration’s attempt to impose its own ill-conceived and counterproductive AI policies on the American people.”
Kessler also emphasized a new direction focused on an “inclusive strategy” to share AI technology with trusted partners.
The withdrawal allows India greater freedom to import Nvidia chips—key to its growing AI initiatives in both public and private sectors.
Although no formal deals with India have been announced yet, the policy shift signals potential for deeper U.S.–India AI cooperation.
Under the new rules, U.S. restrictions will now focus solely on adversarial states, relieving allies of burdensome export limits.
The policy shift is already leading to major deals, such as Nvidia’s new partnership with Saudi Arabia’s AI startup Humain.
As part of this deal, Nvidia will ship 18,000 of its latest Blackwell GB300 chips to power a 500-megawatt data center in Saudi Arabia.
Nvidia CEO Jensen Huang said: “AI, like electricity and internet, is essential infrastructure for every nation.” He added that the collaboration aims to help Saudi Arabia fulfill its national vision.
David Sacks further defended the policy reversal by stating: “Diffusion is not a risk with a friend like Saudi Arabia,” highlighting that the previous rule misjudged the nature of AI chip exports and unfairly targeted allied nations.
