Chip Industry Group Urges BIS to Revisit 'Burdensome' AI Diffusion Rule
The Semiconductor Industry Association (SIA) called on the Bureau of Industry and Security April 15 to “rethink” its "flawed" interim final rule on artificial intelligence diffusion, saying the computing chip-related export controls are so complicated and far-reaching that they will harm the long-term international competitiveness of the U.S. semiconductor industry.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Published “in the final days of the Biden administration without formal industry consultation” (see 2501130026), the rule is “poorly calibrated, uninformed by accurate data, market realities, and industry expertise, and risks undermining U.S. leadership,” SIA wrote in its 11-page submission to BIS. While the rule claims it will address only the “starkest risks” and won’t affect most AI technology, SIA believes the controls will, in reality, affect “a vast array of mainstream computing projects,” including less advanced chips.
Among SIA’s specific concerns is that instead of using well-established groups of destination countries, including A, B, D and E, the rule introduces a new three-tier system, which will create "complex compliance challenges for industry, for countries, and for BIS administrators." Additionally, more than 20 NATO allies, including Poland and the Czech Republic, are “inexplicably” excluded from Tier 1, which is for “low-risk” countries, and placed in the more stringent Tier 2.
Another concern is the cap on total processing performance for Tier 2 countries, which SIA believes will have the "perverse effect" of pushing end-users to turn to non-U.S. alternatives, even if those alternatives are technologically inferior. A separate BIS rule on foundry due diligence, which created new lists of trusted chip designers and service providers (see 2501150040), could exacerbate the situation by counting wafers and dies multiple times against the country caps as they move through multi-country production processes, SIA contends.
"Non-U.S. cloud providers are actively expanding in emerging markets, aiming to establish themselves as the reliable AI provider within regional marketplaces," SIA wrote. "An overly complex and burdensome export framework, as embodied by the [AI diffusion rule], will only make these alternative AI solutions more attractive at the expense of U.S. technological leadership."
SIA also said it is unclear whether BIS will have the resources to implement and enforce the AI diffusion rule amid the Trump administration’s efforts to shrink the size of the federal government. The administration recently decided to cut the agency’s budget for the current fiscal year by 10.5% (see 2503260050).
SIA is far from alone in its concerns. The rule has also drawn criticism from a wide range of parties, including Google, Microsoft, OpenAI, Senate Republicans, European Union officials and researchers (see 2503170001, 2502270074, 2504140054, 2502110074 and 2503310037).
BIS head Jeffrey Kessler said at his Senate confirmation hearing in February that he had reservations about the rule and would review it (see 2502270041). A Commerce official said in March that it was still too early to tell how the Trump administration would approach the matter (see 2503200002).
Public comments on the rule are due by May 15, the same day exporters are currently required to begin complying with the new controls. SIA said it submitted its comments 30 days in advance "to ensure the Trump administration has time to calibrate its approach informed by our inputs and perspectives."