United States Temporarily Halts Export Controls on "AI Dissemination," with Fresh Guidance Intensifying Risks Associated with AI-Related Exports
The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce has issued new guidance aimed at preventing the diversion of advanced computing Integrated Circuits (ICs) controlled by the Export Administration Regulations (EAR). This move comes after the rescission of the Biden Administration's Framework for Artificial Intelligence Diffusion (AI Diffusion Rule) in May 2025.
The AI Diffusion Rule, which sought to establish broad export controls on advanced AI model weights and high-performance computing chips, was rescinded due to a policy shift towards a more targeted, risk-based framework for export controls on AI technologies. This shift is particularly focused on advanced computing ICs.
The new guidance provides a non-exhaustive list of "red flags" and recommended due diligence practices to help companies evaluate potential export control evasion with respect to advanced computing ICs. These red flags include instances where the customer never previously received ICs prior to 2022, provides only a residential address for purchases in quantities inconsistent with personal use, or fails to affirm it has the infrastructure to operate the ICs or commodities containing the ICs.
Moreover, the scope of the General Prohibition 10 (GP 10) extends to entities such as financial institutions that support but are not directly engaged in the relevant export. The Huawei Ascend chip, classified as ECCN 3A090, falls within the ambit of GP 10 because the items are captured by the Foreign Direct Product Rule or may have otherwise been produced, purchased, or ordered by a prohibited Entity List designee.
BIS has identified activities that could require an export license where there is knowledge that the AI model will be used for weapons of mass destruction (WMD) or military-intelligence end use. The guidance also emphasises that any purchase or use of Huawei Ascend ICs would violate the EAR's General Prohibition 10.
In light of these developments, BIS may increase enforcement against individuals who support but do not directly engage in prohibited export transactions beyond the use of GP 10. The new guidance cautions that activities prohibited by GP 10 "could result in substantial criminal and administrative penalties," including "imprisonment, fines, loss of export privileges, or other restrictions."
Looking forward, the U.S. strategy is focusing on more precise controls aimed at preventing diversion of advanced AI semiconductor technologies to adversaries such as China. This involves increased scrutiny of trade involving countries with growing chip manufacturing and data center activities, notably Malaysia and Thailand. For example, Malaysia introduced a Strategic Trade Permit requirement for exports, transshipments, and transit of advanced U.S.-origin AI chips under its Strategic Trade Act in July 2025, to enhance oversight and prevent illicit routing that could undermine U.S. export control objectives.
The current U.S. strategy is considering three possible policy pathways for export controls on AI technologies: (1) no new global controls regime, (2) a revised, risk-based export control framework that balances enforceability and innovation, or (3) a more aggressive, blanket control regime that might allow bilateral exemptions. The Trump administration’s AI Action Plan further emphasizes reducing regulatory burdens perceived to stifle innovation, with calls to revise or rollback existing federal AI regulations and agency guidance developed under the previous administration.
In summary, the latest developments reflect a pivot away from the Biden-era AI Diffusion Rule’s broad and somewhat vague controls, towards more calibrated measures that combine targeted export restrictions with strengthened international cooperation and regulatory alignment in the Indo-Pacific region. The strategic aim is to protect U.S. technological leadership and national security interests while supporting innovation and effective implementation through clearer and more enforceable export control policies.
- The U.S. strategy is focusing on more precise controls in the industry sector, particularly in the area of advanced AI semiconductor technologies, such as those controlled by the Export Administration Regulations (EAR).
- The new guidance from the Bureau of Industry and Security (BIS) highlights the importance of artificial-intelligence technologies, emphasizing that any purchase or use of certain AI chips, like the Huawei Ascend ICs, could result in substantial penalties under the General Prohibition 10 (GP 10), particularly if these chips are intended for use in weapons of mass destruction (WMD) or military-intelligence end use.
