New AI Diffusion Rule Will Let Allies Buy US Chips With Conditions, Commerce Head Says
The Commerce Department is drafting a replacement for its recently repealed AI diffusion rule to ensure the new controls don’t impede U.S. exports to allies, Commerce Secretary Howard Lutnick said June 4.
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“Our view is we are going to allow our allies to buy AI chips provided they’re run by an approved American data center operator and the cloud that touches that data center is an approved American operator, so we control it while it’s over there,” Lutnick testified before the Senate Appropriations Subcommittee on Commerce, Justice and Science.
The rule that was rescinded last month (see 2505130018) was “very confusing,” Lutnick said. “For example, the prime minister of Poland hunted me down and said, ‘What did I ever do to you that you have me as a Tier 3’ country, the most stringent of three tiers? ‘I’m part of Europe -- what are you doing?’ It was illogical. It was hastily rushed through at the very end of the Biden administration.”
Lutnick later told Export Compliance Daily that he expects Commerce will release the new AI diffusion rule soon. “I can’t say with more specificity but pretty soon,” he said.
Responding to questioning by Sen. Chris Coons, D-Del., who said he’s concerned the Trump administration’s new AI deal with the United Arab Emirates could make the U.S. dependent on "Middle East compute" (see 2505210051), Lutnick explained that the deal will require the UAE to invest in building U.S. data centers if it buys a significant number of American chips. He also said the administration agrees with Coons that “more than 50% of compute must be on our shores.”
Responding to Sen. Chris Van Hollen, D-Md., who asked to receive the text of the UAE deal before any licenses are issued, Lutnick said he would be willing to brief the senator on the agreement but would need to ask the State Department whether the text could be shared. Van Hollen insisted that Congress needs more information to conduct proper oversight. “I think we need to go into this very clear-eyed” in light of the UAE’s ties with China, the senator said. “The concern is that we make sure that we lock down the terms, at least that we understand the terms.”
Also during the hearing, Lutnick said that U.S. export controls on chip-making tools have prevented China from making the highest-quality chips. “They say they are making them and they are not,” he testified. The Biden administration worked with Japan and the Netherlands to tighten controls on chip-making equipment (see 2502070031).