Trump’s “AI Diffusion” Rule Aims to Restrict China’s AI Progress; Huawei Chips Now Labeled as Violations

The United States Bureau of Industry and Security (BIS) has unveiled updated guidance concerning the revised AI Diffusion Rule, which is particularly aimed at the burgeoning artificial intelligence (AI) capabilities in China.

Revised AI Diffusion Rule: Implications for Huawei and AI Technology in China

Under stringent US export controls, China has significantly advanced its AI technologies. A notable illustration of this progress is seen in the achievements of DeepSeek alongside Huawei’s advancements in hardware development. Although the US has curtailed the availability of cutting-edge chips to China’s AI sector, these restrictions have inadvertently catalyzed China’s capability growth. The upcoming AI Diffusion Rule is expected to address this situation by targeting Chinese AI assets. According to a recent press release from the BIS, the objective is to undermine the impact of Chinese AI chips and models.

“The Trump Administration will pursue a bold, inclusive strategy to American AI technology with trusted foreign countries around the world, while keeping the technology out of the hands of our adversaries. At the same time, we reject the Biden Administration’s attempt to impose its own ill-conceived and counterproductive AI policies on the American people.”- US Secretary of Commerce for Industry and Security Jeffery Kessler

The primary goal of the revised AI Diffusion Rule is to impose restrictions on Huawei’s Ascend chips. This marks a pivotal moment, as this is the first explicit mention of these AI chips in official communications, highlighting the remarkable progress of Huawei’s Ascend AI series. The legislation indicates that utilizing Ascend accelerators globally will be deemed a violation of US export controls, effectively confining their usage within China’s borders and curbing their international reach.

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Furthermore, the utilization of American AI chips, particularly those produced by NVIDIA, for training Chinese AI models is set to face increased scrutiny. One potential measure includes integrating “tracking features”into these chips, enabling authorities to monitor their usage location. This procedure is gaining traction, as a bill facilitating such integrations has already progressed to the US Senate, suggesting that soon AI chips may come equipped with location-tracking technology or even a deactivation mechanism.

The revised AI Diffusion Rule appears poised to be less severe compared to the regulations established during the Biden presidency. A critical emphasis of the new directives is on preventing Huawei from expanding into offshore markets, a move that could pose a substantial threat to companies like NVIDIA. The evolving landscape of AI technology continues to reshape geopolitical dynamics, warranting close attention from industry stakeholders and policymakers alike.

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