State of BIS AI Chip Controls Is ‘Incredibly Unclear,’ Industry Officials Say

“It's really scary to me. Either fix it or don’t,” Felice Laird, founder of trade compliance consultancy Export Strategies and a former Commerce Department official, said of the AI diffusion rule.

“It just seems to be a difficult place to be legally,” she said during a Regulations and Procedures Technical Advisory Committee meeting this week. “And if I was giving advice to somebody, it would be to comply with the rules as they are published.”

A BIS spokesperson didn’t respond to a request for comment.

BIS in May announced on its website that it wouldn't be enforcing the restrictions outlined in the rule, although the agency hasn’t yet formally rescinded it from the Federal Register (see 2505130018). Laird, who said she advises mostly smaller companies working with items in Categories 3, 4 and 5 of the Commerce Control List, said she would “not feel comfortable advising a client to ignore them -- these rules, the AI diffusion rules -- entirely.”

She noted that senior BIS officials, along with Commerce Secretary Howard Lutnick, have said they want to increase enforcement and penalties against export control violators (see 2503180041, 2503280039 and 2504140055). She also pointed out that BIS officials said they have considered expanding the agency's statute of limitations for certain export control violations (see 2503190035).

“You're going to try to tell somebody that, in June of 2025, that there was something on the website that said that you didn't have to comply with the regulations that had been published in the Federal Register as an interim final rule?” she said. “I think it's a really scary place to be.”

Aaron Woolf, director of global policy for economic security at the Semiconductor Industry Association, said the lack of a formal rule to officially remove the AI diffusion regulation is “creating a fair amount of regulatory uncertainty for our industry.”

He added that some companies have been told that they can still use the new license exceptions created in the AI diffusion rule, “which is confusing since, as we know, BIS announced that they planned to rescind it.” Some SIA member companies are also unsure whether the previous chip rules issued by BIS in October 2022 and 2023 are “still applicable.”

“We hear from our member companies on a regular basis that the rules of the road when it comes to AI are incredibly unclear,” Woolf said.

Portions of the new chip guidance that BIS issued last month have added to that uncertainty, he said. One guidance document said certain Chinese-made advanced chips, including Huawei Ascend chips, were likely developed in violation of U.S. export controls, and that a company may be violating controls if they "take any action with respect to" those chips.

Woolf said SIA members have reported there is a “lack of clarity” surrounding the phrase: “with respect to."

“This phrase can lead to different legal interpretations of the scope and applicability of the guidance, which, as you all can imagine," he said, "makes it difficult for companies to know how to comply.”

He added that many companies that sell or move otherwise uncontrolled items “lack visibility” into whether they’re using one of those advanced Chinese chips, which BIS said is any Chinese chip that meets the parameters of a chip controlled under Export Control Classification Number 3A090.

“As the boundaries of compliance are unclear,” Woolf said, “it is unclear whether such routine transactions could violate or could constitute a violation.”

Another guidance document issued by BIS outlined a series of red flags that could signal a customer is planning to violate the agency’s semiconductor-related export controls. Several of those red flags have “created new compliance questions for which we have been seeking clarification,” Woolf said. SIA has asked BIS to provide more guidance by publishing FAQs, he said.

Earlier in the meeting, Tim Mooney, acting director of the BIS Regulatory Policy Division, said some FAQs are “working their way through the process.”

Woolf also said the Trump administration should reestablish the President's Export Council Subcommittee on Export Administration, an industry advisory committee aimed at providing input on export controls (see 2401080008). Although the traditional BIS technical advisory committees are an “important mechanism for government engagement with industry,” he said those committee members are usually “compliance-oriented folks” who may not always have the same “visibility into longer-term business plans” that a C-suite executive may have.

“Given BIS’ continued focus on the semiconductor industry,” he said, “we hope that the department will make a concerted effort to put in place these other channels for regular engagement with leaders.”

Woolf added that SIA has asked for and received briefings from BIS, where it has raised concerns anonymously from its member companies. The Trump administration has shown “openness to engage members on their specific questions," he said.

But he also said he wanted to underscore the “importance" of BIS working with industry as it crafts new chip export controls, so the government can get it “right the first time.”

Laird, who has been consulting for more than 30 years, said she’s concerned BIS isn’t prioritizing consultations with industry. Deciphering complex new export regulations may be easier for bigger companies that can afford a large export compliance staff and trade lawyers, she said, but smaller businesses are struggling.

She said the expectation that all companies can "thoroughly comply” with the hundreds of pages of chip controls BIS has issued in recent years is “unrealistic.”

In the past, “it seemed that there was a definite interest on the part of BIS and others to get industry input, and that that input was valued,” Laird said. “And it looks like that's falling apart.”