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On Wednesday, the Trump administration announced plans to rescind and replace a Biden-era rule regulating the export of high-end AI accelerator chips worldwide, Bloomberg and Reuters reported.

A Department of Commerce spokeswoman told Reuters that officials found the previous framework "overly complex, overly bureaucratic, and would stymie American innovation" and pledged to create "a much simpler rule that unleashes American innovation and ensures American AI dominance."

The Biden administration issued the Framework for Artificial Intelligence Diffusion in January during its final week in office. The regulation represented the last salvo of a four-year effort to control global access to so-called "advanced" AI chips (such as GPUs made by Nvidia), with a focus on restricting China's ability to obtain tech that could enhance its military capabilities.

News of the planned policy shift immediately affected markets, with shares of Nvidia rising 3 percent after the announcement. Since April, AI chip makers have seen several other stock market swings due to ever-shifting Trump policy announcements related to tariffs, a separate but interrelated issue.

The changing face of chip export controls

The Biden-era chip restriction framework, which we covered in January, established a three-tiered system for regulating AI chip exports. The first tier included 17 countries, plus Taiwan, that could receive unlimited advanced chips. A second tier of roughly 120 countries faced caps on the number of chips they could import. The administration entirely blocked the third tier, which included China, Russia, Iran, and North Korea, from accessing the chips.

Commerce Department officials now say they "didn't like the tiered system" and considered it "unenforceable," according to Reuters. While no timeline exists for the new rule, the spokeswoman indicated that officials are still debating the best approach to replace it. The Biden rule was set to take effect on May 15.

Reports suggest the Trump administration might discard the tiered approach in favor of a global licensing system with government-to-government agreements. This could involve direct negotiations with nations like the United Arab Emirates or Saudi Arabia rather than applying broad regional restrictions. However, the Commerce Department spokeswoman indicated that debate about the new approach is still underway, and no timetable has been established for the final rule.