The Trump administration is working on changes to Biden-era rules that limit global access to artificial intelligence chips, including potentially eliminating the world division into tiers that help determine how many advanced semiconductors each country can receive, three sources familiar with the matter said.
The sources said the plans are still under discussion and warned that they could change. But if they are adopted, the removal of the tiers could pave the way for using U.S. chips as an even more powerful bargaining tool in trade relations.
The regulation, issued in January, is aimed at allocating access to cutting-edge AI chips and controlling certain model weight factors to keep the most advanced computing power in the United States and among its allies, rather than in China and other countries of concern.
The "AI spreading framework," as the rule is called, was published by the U.S. Department of Commerce in January, one week before the end of the Biden administration's term. Companies are required to comply with its restrictions starting on May 15.
Under this rule, the world is divided into three tiers. Seventeen countries and Taiwan in the first tier can receive an unlimited number of chips. Around 120 other countries are in the second tier, which limits their access to AI chips. Third-tier countries, such as China, Russia, Iran, and North Korea, have no access to chips.
However, according to sources, Trump administration officials are considering moving away from the multi-tiered access approach under the rule and replacing it with a global licensing regime with intergovernmental agreements.
"There are voices pushing to eliminate these tiers," Wilbur Ross, who served as Commerce Secretary under the first Trump administration, said in an interview on Tuesday. "I think it's still a work in progress." He noted that one alternative is intergovernmental agreements.
Such a structure would likely be tied to a broader trade strategy by President Donald Trump to strike deals with individual countries, one source said. This would make it easier for the U.S. to use access to American chips as leverage in other negotiations.
U.S. Commerce Secretary Howard Latnik said at a conference in March that he wants to include export control issues in trade negotiations.
Other possible changes include lowering the threshold for licensing exemptions. Under the current rule, orders worth approximately the equivalent of 1700 units of Nvidia's (NVDA.O) powerful H100 chips are excluded from the chip restrictions for countries and require only a government notification of the order. No license is required.
One source said the Trump administration is considering limiting shipments for orders equivalent to 500 H100 chips.
A spokesperson for the U.S. Department of Commerce declined to comment. The White House press office did not immediately respond to a request for comment.
For months, officials in the Trump administration have hinted that they want to make the rule "stronger but simpler," but at least some experts believe that eliminating the tiers would complicate it.
Ken Gluck, executive vice president of Oracle (ORCL.N), a critic of the current administration, said the tiers don't make sense, noting that Israel and Yemen are in the second tier.
"I wouldn't be surprised if they reconsider this issue," Gluck said, adding that he is not aware of the Trump administration's plan but expects the rule to be significantly changed.
Oracle and Nvidia openly criticized the new rule when it was published in January.
The industry argued that limiting access to chips would push countries to buy technology from China. Some U.S. lawmakers agreed. Seven Republican senators sent a letter to Latnik in mid-April requesting that the rule be overturned.
The letter stated that these restrictions would drive buyers, especially in second-tier countries, to seek "unregulated cheap substitutes" from China.