Donald Trump's administration to overhaul US semiconductor export policy amid flood of AI chip deals in Saudi, UAE

United States President Donald Trump's administration is looking to overhaul Joe Biden-era regulations related to the export of semiconductors, Bloomberg reported. This was announced by the US Commerce Department on May 13.

Joe Biden's AI diffusion rules, for use of chips in artificial intelligence, were set to come into force on May 15. It faced stiff opposition from chip majors including Oracle and Nvidia, it added. The rule created three tiers of access for countries seeking to import AI chips from US companies.

AI Chip exports: Trump administration may have individual deals on cards: Sources

Sources told the publication that the Trump administration is instead considering negotiating individual deals with countries.

Further, and the US Commerce Department is also issuing guidance that use of Huawei’s Ascend AI chips “anywhere in the world violates US export controls”; and plans to issue public warning about potential consequences of allowing US AI chips to be used in developing Chinese AI models.

In its statement on May 13, the agency said the scrapped rules “would have undermined US diplomatic relations with dozens of countries by downgrading them to second-tier status”.

A former repeal of the rule will be notified and a replacement will be issued “in the future”, it added. This came just ahead of Donald Trump's tour to the middle-east, which he began in Saudi Arabia today. He is expected in the United Arab Emirates later this week.

Regulating US Chips Supply to China

Debate around export of AI chips from the US to China is ongoing, both Biden and Trump seeking to regulate shipments due to concerns that advanced chip and AI technology could lend China a military edge.

The US first imposed sweeping restrictions on advanced chip sales to China in 2022, and has continually upgraded restrictions since. The Gulf and Southeast Asia (over 40 countries) were included in these measures in 2023.

Donald Trump's Gulf Visit: Host of AI Deals Announced, In Works

Under agreements with the US, Saudi Arabia and the UAE are poised to win wider access to advanced AI chips from Nvidia and Advanced Micro Devices (AMD) during Donald Trump's Middle-East visits. We list what is on the cards:

• Amazon.com Inc. and Humain said they would invest more than $5 billion to build an “AI zone” in Saudi Arabia.
• Rival AMD is set to provide chips and software for data centers “stretching from the Kingdom of Saudi Arabia to the United States” in a $10 billion project, Humain and AMD said.
• Cisco Systems Inc., the world’s largest provider of networking gear, is working with Humain to combine its “global expertise with the kingdom’s bold AI ambitions” to build infrastructure. It also extended a partnership with Abu Dhabi AI firm G42.
• Global AI, a US tech venture, also plans to collaborate with Humain, in an agreement expected to be worth billions of dollars, sources told Bloomberg.
• Nvidia, the world’s biggest semiconductor maker, will supply “several hundred thousand” of its most advancedd AI chips to Saudi Arabia’s Humain over the next five years. This includes 18,000 of its cutting-edge GB300 Grace Blackwell products and its InfiniBand networking technology.
• The UAE could also get 5,00,000 advanced Nvidia chips each year from now till 2027, sources told Bloomberg. One-fifth would be set aside for G42, while the remainder would go to US companies building data centers in the Gulf nation, they added.
• OpenAI is considering building new data center capacity in the UAE, sources said. They added that the details are not final and could change.
• Elon Musk's space internet company Starlink has also signed a deal with Saudi Arabia, for service of the Kingdom's aviation and maritime shipping.
• Saudi Arabian venture capital firm STV launched a $100 million AI fund with backing from Alphabet Inc.’s Google, focused on early-stage startups in the Middle East and North Africa for infrastructure development, according to a statement. How much Google will contribute is not yet known.

(With inputs from Bloomberg)