US Retreats on AI Chip Export Clampdown

Commerce Department U-Turn

The US Department of Commerce has scrapped a rule introduced under the Biden administration that aimed to curb the export of AI chips and associated technologies. The now-abandoned provision, originally proposed in October 2022, intended to prevent American companies from assisting the development of advanced AI chips abroad—especially in China—by restricting access to cloud computing services and technical support. However, government officials reversed course after internal deliberations and pushback from industry stakeholders who argued the rule could hurt US competitiveness and innovation. The final version of the rule, released this week, eliminates language that would have extended restrictions to US cloud providers offering access to advanced chips indirectly.

Industry Pressure and Global Repercussions

Silicon Valley heavyweights and global allies voiced concerns that the initial proposal was overly broad, potentially restricting business operations and creating friction with partners. The move drew particular ire from major cloud providers like Amazon, Microsoft, and Google, which feared compliance headaches and reduced global competitiveness. US allies also raised red flags, noting the policy could disrupt collaborative international R&D efforts. While Washington maintains its broader strategy to prevent China from leveraging American technology for military purposes, the rollback signals a more measured, flexible approach toward regulating AI chip exports in a fast-evolving sector. The decision highlights the complexities in balancing national security, economic growth, and tech diplomacy.