The United States has officially scrapped a controversial rule introduced during the Biden administration that limited the export of advanced artificial intelligence (AI) chips. This decision is expected to benefit countries like India, which are actively building AI infrastructure and seeking greater access to powerful chips made by companies like Nvidia.
The rule, known as the "AI diffusion rule," was introduced to restrict China's access to high-end AI technology. However, it drew criticism for being overly restrictive and diplomatically insensitive, treating nations like Mexico, Portugal, and India with "second-tier status" and imposing quotas on chip imports.
The Trump administration has withdrawn this rule, opting for a more inclusive strategy of sharing AI technology with trusted partners worldwide. Under Secretary of Commerce Jeffrey Kessler emphasized that the US would now pursue a policy that doesn't unfairly penalize allies. This shift opens the door for countries like India to access more Nvidia chips without arbitrary limits, supporting India's push in the AI space.
Nvidia had criticized the proposed rule, warning that restrictions on American GPU exports would support the development and proliferation of competing hardware, software, and standards, particularly those developed in China. The company's CEO, Jensen Huang, has been advocating for change, emphasizing the need to accelerate the diffusion of American AI technology worldwide.
The cancellation of the rule has already led to significant deals, such as Nvidia's partnership with Saudi Arabia's AI startup Humain, backed by the Kingdom's sovereign wealth fund. As part of the deal, 18,000 of Nvidia's latest Blackwell GB300 chips will be shipped to Saudi Arabia to power a massive 500-megawatt data center.
