On May 13, 2025, the Bureau of Industry and Security (BIS) announced its intent to rescind the Biden administration’s Framework for Artificial Intelligence Diffusion (AI Diffusion Rule) that is scheduled to go into effect on May 15. BIS will publish a Federal Register notice formalizing its decision. In the meantime, Under Secretary of Commerce for Industry and Security Kessler has instructed BIS not to enforce the AI Diffusion Rule.
BIS separately announced actions to strengthen export controls on advanced computing integrated circuits (ICs).
New policy statement on advanced computing ICs and commodities used to train AI models
The new BIS policy emphasizes the catch-all controls under Part 744 of the Export Administration Regulations (EAR), warning that knowledge of items being used to train AI models can trigger license requirements or penalties. Specifically:
- The policy clarifies that exports, reexports, or transfers (in-country) of advanced computing ICs and related commodities (e.g., ECCNs 3A090.a, 4A090.a, and related .z items) intended for training AI models may require an export license when the intended end use or end user is for military-intelligence applications or weapons of mass destruction in China or other Country Group D:5 nations.
- The prohibitive policy extends to U.S. persons providing “support” or services that facilitate such training, and it applies even when items are routed through third-party infrastructure as a service (IaaS) providers.
- Persons doing business with advanced computing ICs and related commodities must conduct heightened due diligence, follow new BIS “red flag” guidance, and avoid “self-blinding,” as violations can lead to civil or criminal penalties.
- Non-U.S. companies doing business in China with advanced computing ICs and related commodities can be at risk of being designated on the Entity List if foreign-made items are supplied to these targeted end uses and end users, even where no violation occurs.
Guidance on protecting supply chains against diversion tactics
BIS published new guidance for industry outlining “red flags” and due diligence steps that industry should adopt to prevent diversion of advanced ICs.
- Expanding on previous guidance in related contexts, under BIS’s identified “red flags” include sudden order spikes, use of residential addresses, and inadequate data center infrastructure.
- BIS guidance on due diligence includes customer vetting, end-use/end-user certifications, infrastructure attestations, and heightened scrutiny of data centers that have the infrastructure to operate servers containing advanced ICs greater than 10 megawatts.
Guidance on risks of using Chinese advanced ICs
BIS issued guidance warning that advanced-computing ICs meeting the parameters for control under Export Control Classification Number (ECCN) 3A090 that are developed or produced by companies located in, headquartered in, or whose ultimate parent company is headquartered in Country Gorup D:5 (including China) or Macau may implicate General Prohibition 10 under the EAR. Because these ICs were likely developed or produced in violation of U.S. export controls, they are presumptively subject to General Prohibition 10, exposing anyone who uses, transfers, or otherwise services them without authorization to significant enforcement risk.
BIS specifically identified the Huawei Ascend 910B, 910C, and 910D as being subjection to the presumption that General Prohibition 10 restrictions apply.
Companies purchasing advanced-computing ICs will need to vet their supply chain to prevent follow-on violations resulting from this treatment.
Additionally, non-U.S. companies who have such ICs in their inventory or use the ICs in their products will need to assess how to handle the ICs without violating the EAR, which may require voluntary disclosure and requests for General Prohibition 10 authorizations.
BIS’s actions signal a sharpened enforcement focus. Companies should confirm proper BIS authorization was obtained before purchasing or integrating these advanced-computing ICs. Companies should also map their supply chains for advanced AI hardware, implement robust know-your-customer and end-use verification protocols for any AI-related transactions, obtain BIS licenses where needed, and evaluate future dealings involving Huawei Ascend or other China-designed ECCN 3A090 ICs.