U.S. Officially Repeals AI Diffusion Rule, Expands Chip Access for Middle East

On May 13, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) officially announced on its website the repeal of the Biden administration's *AI Diffusion Rule* issued in January 2025, while simultaneously strengthening controls on global chip exports. This move coincides with former President Trump's visit to Saudi Arabia, as the U.S. plans to ease AI chip export restrictions to Middle Eastern allies such as Saudi Arabia and the UAE, but tighten controls on related technologies to China.

1.1. Jeffrey Kessler, the new Deputy Secretary of Commerce for Industry and Security, declared the Trump administration will adopt a "bold and inclusive strategy" to share U.S. AI technologies with trusted countries while preventing access by "adversaries."

1.2. Enforcement of Biden's AI Diffusion Rule has been suspended, with plans to formally repeal it through the *Federal Register* and introduce a replacement framework.

2.1. The Commerce Department issued new guidance clarifying that global use of China's Ascend AI chips violates U.S. export controls.

2.2. U.S. companies are warned of "potential consequences" if their AI chips are used to train or infer with Chinese AI models, to prevent indirect technology transfer via cloud services.

2.3. Guidance on supply chain risk mitigation was also provided to prevent illegal resale or misuse of chips.

3.1. The Trump administration is finalizing an agreement with Saudi Arabia to allow increased imports of advanced AI chips from Nvidia and AMD.

3.2. This will support Humain, a Saudi AI company backed by the Public Investment Fund (PIF), planning to build a 1.9 GW data center by 2030. Initial projects will use 18,000 Nvidia GB300 Grace Blackwell chips and InfiniBand networking.

3.3. Nvidia CEO Jensen Huang highlighted Saudi Arabia's energy resources and the potential for AI development using Nvidia technology.

3.4. AMD announced a \$10 billion investment in AI data centers spanning Saudi Arabia and the U.S., providing chips and software support.

3.5. White House AI advisor David Sachs emphasized that partnerships with allies like Saudi Arabia pose no technology diffusion risks.

4.1. Negotiations with the UAE propose allowing annual imports of 500,000 Nvidia advanced AI chips from 2025 to 2027, possibly four times the Biden-era limits.

4.2. One-fifth of these chips will be allocated to Abu Dhabi AI firm G42, with the rest supporting U.S. companies building data centers in the UAE, such as potential projects by OpenAI.

4.3. Congressman John Moolenaar warned that collaborations with firms like G42 require "strict oversight and verifiable safeguards" to prevent technology leaks.

4.4. Media coverage notes the shift in U.S. policy towards Middle Eastern AI development while maintaining concern over China potentially accessing chips or cloud compute via the UAE.

5.1. Nvidia's stock surged 6.4% in New York following the Saudi cooperation news; AMD's shares rose 4.5%.

5.2. Nvidia called the repeal of the AI Diffusion Rule an opportunity for the U.S. to lead the "next industrial revolution."

5.3. Trump's visit to Saudi Arabia is the first leg of his Middle East trip, with planned visits to Qatar and the UAE expected to announce further chip agreements.

5.4. Over the coming months, the U.S. may negotiate bilateral chip deals with additional countries, reshaping the global AI technology landscape.