Foreign governments and US tech companies are urging Trump to reverse the AI diffusion rule, a global chip export policy set to take effect in less than two months. The rule, introduced during the last days of the Biden administration, limits how many AI chips can be exported to most countries.
According to Bloomberg, officials from Israel, Poland, and the United Arab Emirates, along with tech giants like Nvidia, Oracle, and Google, are now pressuring the Trump administration to weaken or completely scrap the rule before it locks in.
The AI diffusion rule splits countries into three categories, granting full access to close US allies, banning exports to adversaries like China and Russia, and capping shipments to countries in the middle. The middle group includes many with growing AI ambitions—such as India, UAE, and Malaysia—which previously weren’t impacted by chip restrictions.
Leaders in those regions say the rule makes them less attractive for AI investments and puts their infrastructure plans at risk. Executives and diplomats have reached out directly to Trump’s team to change the policy.
Trump officials weigh changes as companies warn of losses
The Commerce Department, which manages export rules, has not responded publicly. No full repeal is currently on the table, but people close to the matter say it’s unclear how much Trump and his top officials might alter the policy. What’s being debated now is how far to scale back or rewrite the restrictions. There’s no consensus yet inside the administration.
The White House wants to keep AI development tightly controlled. Officials want US companies to build critical infrastructure either at home or in allied countries that meet American security standards. That includes data centers in India, Brazil, or Malaysia, which would need to follow US-mandated cybersecurity rules and remove Chinese-made hardware from their supply chains if they want access to US chips.
Under the current rule, nearly 20 countries — mostly in Europe and East Asia — have full access to US AI chips. The rest of the world falls into two groups: nations like China and Russia, which are cut off completely, and middle-tier countries facing strict caps. These middle countries are now the center of the dispute.
Nvidia and Oracle lead tech revolt against the rule
Nvidia and Oracle have both asked the Trump administration to kill the AI diffusion rule and start over. They say the framework is too rigid and hurts business. Jensen Huang, Nvidia’s CEO, said last week, “We should continue to interact with the government so that whatever policy they believe is best is informed.” He was answering a question about export controls generally, not the rule itself.
Oracle has a more specific problem. The company is building a $6.5 billion data center in Malaysia, and the rule’s 7% cap on how much computing power can be hosted in any second-tier country would make that project impossible. SemiAnalysis, a research firm, says the cap would be blown out of the water by that one project alone.
To push back, Oracle and Nvidia joined the Information Technology Industry Council (ITI), a lobbying group that represents major US tech companies. They’ve taken a clear stance: repeal the rule completely. But not everyone in the group agrees. Some members think the rule could be a useful framework — just not in its current form.
Google has complained that the rule places an unfair burden on American cloud companies but hasn’t gone as far as asking for repeal. Anthropic, another AI firm, is asking Trump’s team to actually make the rule tougher. Right now, second-tier countries can receive up to 1,700 of Nvidia’s H100 chips without needing a formal export license — only a government notification. Anthropic wants that number reduced. They argue the current setup makes it easy for bad actors to smuggle chips in small batches.
UAE and Microsoft back deal despite concerns
The UAE has tried to play by the rules. Officials there are offering to align with US interests, including helping Microsoft broker G42’s exit from Huawei to clear the way for a $1.5 billion investment in Abu Dhabi. The goal was to show they’re serious about removing Chinese influence. But not everyone in Washington is convinced. The UAE has deep ties to Beijing, and officials are skeptical they can fully prevent Chinese firms from accessing data centers in UAE and Kenya.
Still, Emirati leaders are pushing ahead. National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan, who oversees a $1.5 trillion investment empire that includes G42, flew to Washington recently to meet with Trump and Cabinet members. Right after his visit, a UAE sovereign wealth fund committed $25 billion to a US energy partnership focused on powering data centers. The White House said the UAE could spend as much as $1.4 trillion in the US over the next 10 years. That includes funding a huge AI project called Stargate, a joint venture with OpenAI and SoftBank, managed by UAE’s MGX investment firm.
Microsoft has backed parts of the rule. A top executive wrote in a blog post that they support the idea of security guardrails but warned against labeling countries like UAE as second-tier. When asked about the policy, a Microsoft spokesperson referred Bloomberg to that post and the company’s past AI policy statements, which don’t specifically mention export controls.
Israel, Poland, and India push for flexibility
The rule has also caused backlash in Israel. Prime Minister Benjamin Netanyahu’s advisers raised the issue before his DC trip last month, and the discussion continued after. According to an Israeli official, their concern isn’t a chip shortage but that the rule will make US suppliers look elsewhere. Israel is now working on a new law to bring its export controls in line with US expectations. That could help the country move up to top-tier status, though the official admitted it might take a trade-off with Trump’s administration.
Poland is in a similar spot. President Andrzej Duda told Polsat News TV that he raised the issue with Trump and other officials in February. He said Trump responded by saying the matter “needs to be dealt with.” Commerce Secretary Howard Lutnick also promised to review the rules.
India has the most at stake. The country is trying to build what could be the largest data center project in the world, but it can’t move forward without enough Nvidia chips. The US sees India as a counterweight to China, but there’s a problem: India has a track record of funneling restricted tech to Russia. To work around that, Biden’s national security council sent officials to Delhi in January with a possible solution — a direct government-to-government deal that would make it easier for India to import US chips.
The AI diffusion rule is one of the most aggressive tech control efforts the US has ever attempted. It’s not just about chips — it’s about power. If Trump keeps it in place, countries that don’t meet US conditions will be locked out of the AI race. If he rolls it back, the US loses leverage. Right now, no one knows what’s going to happen.
Every player — from tech CEOs to prime ministers — is waiting on Trump to make a call. With under 60 days to go, the pressure is only building.
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