BIS Rescinds AI Diffusion Rule and Issues New Guidance
Summary
May 16, 2025 UPDATE: BIS published an updated press release, which can be found here.
On May 13, 2025, the Commerce Department’s Bureau of Industry and Security (BIS) announced that the Commerce Department initiated a rescission of the Biden Administration’s Framework for Artificial Intelligence Diffusion (“AI Diffusion Rule”). BIS also issued guidance to strengthen export controls on overseas AI chips, including:
- Policy Statement on advanced computing integrated circuits (ICs) and other commodities to train AI models;
- Industry Guidance to prevent diversion of advanced computing ICs; and
- Guidance on the application of General Prohibition 10 (GP10) to China’s advanced computing ICs.
AI Diffusion Rule
The Under Secretary of Commerce for Industry and Security Jeffery Kessler has instructed BIS enforcement officials not to enforce the AI Diffusion Rule. The Rule was published on January 13, 2025, with a compliance date of May 15, 2025. It revised the Export Administration Regulations’ (EAR) controls on advanced computing ICs and added a new control on AI model weights. Specifically, the AI Diffusion Rule:
- added a control for AI model weights under Export Control Classification Number (ECCN) 4E091;
- expanded the license requirements and revised the review policy for ECCNs 3A090.a, 4A090.a, and corresponding .z items;
- expanded the country scope of License Exception Advanced Computing Authorized (ACA);
- added new License Exceptions Artificial Intelligence Authorization (AIA), Advanced Compute Manufacturing (ACM), and Low Processing Performance (LPP);
- added new red flag guidance related to AI model weights;
- bifurcated the Data Center Validated End-User (VEU) Authorization into Universal and National VEU Authorizations;
- updated the License Exception Notified Advanced Computing (NAC) notification procedures; and
- expanded the destination scope of the advanced computing foreign direct product (FDP) rule and added a new FDP rule for AI model weights in ECCN 4E091.
BIS Policy Statement on Controls that May Apply to Advanced Computing Integrated Circuits and Other Commodities Used to Train AI Models (May 13, 2025)
In this Policy Statement, BIS updated previous advisory opinions to identify certain types of activities that may be subject to an export authorization under the EAR with respect to advanced computing ICs and commodities subject to the EAR for training AI models. Advanced computing ICs and commodities that contain such ICs include items classified under ECCNs 3A090.a, 4A090.a, and corresponding .z items in Categories 3, 4, and 5. Specifically, the following activities may trigger a license requirement under the catch-all controls of Part 744 when there is “knowledge” that the AI model will be used for weapons of mass destruction (WMD) or military-intelligence end use/user:
- Exports, reexports, or transfers (in-country) of advanced computing ICs and commodities to any party when the exporter, reexporter, or transferor has “knowledge” that the party will use these items to conduct training of AI models for or on behalf of parties headquartered in D:5 countries (including China) or Macau.
- Transfers (in-country), defined as a change in end use or end user, of advanced computing ICs and commodities already in possession of parties, if there is “knowledge” that the items will be used by the transferee to train AI models for or on behalf of parties headquartered in D:5 countries (including China) or Macau.
- A “U.S. person” provides any “support” or performs any contract, service, or employment, when there is “knowledge” such activity will be used for or may assist the training of AI models for or on behalf of parties headquartered in D:5 countries (including China) or Macau.
In addition, foreign parties acting contrary to U.S. national security and foreign policy interests, including by training AI models that could support WMD or military-intelligence end uses for or behalf of parties headquartered in D:5 countries (including China) or Macau, may be added to the Entity List, even where no violation of the EAR occurs.
Industry Guidance to Prevent Diversion of Advanced Computing Integrated Circuits (May 13, 2025)
In this Industry Guidance, BIS is providing guidance to help increase the industry’s awareness of illegal diversion schemes involving advanced computing ICs and commodities that contain such ICs, i.e., items classified under ECCNs 3A090.a, 4A090.a, and corresponding .z items. The Guidance identifies a non-exhaustive list of new transactional and behavioral red flags (in addition to the “Know Your Customer” and Red Flag Guidance available on the BIS website and set forth in Supplement No. 3 to Part 732 of the EAR) and due diligence actions that can assist companies in evaluating whether a party or an identified activity may be connected to export control evasion. The Guidance states that companies should take these due diligence actions for new customers, as well as evaluating Infrastructure-as-a-Service (IaaS) providers, involved with the export or use of advance computing ICs or commodities that contain such ICs subject to the EAR, especially those located in destinations outside of A:1 countries identified in Supplement No. 1 to Part 740.
The Guidance also identifies catch-all controls that may apply to advance computing ICs for training AI models, which include the activities identified in the Policy Statement discussed above.
Finally, the Guidance identifies information and assurances that can help prevent the unauthorized diversion of advanced computing ICs for restricted end uses and end users. The information and assurances are not meant to replace existing customer certifications and end-use statements that exporters have already determined best mitigates diversion risk. Rather, the Guidance encourages exporters to review the information and assurances and consider whether it is worth adding to existing practices and documentation to help prevent diversion, as the unwillingness of a customer to attend to one or more requests for information may be a red flag.
Guidance on Application of General Prohibition 10 (GP10) to People’s Republic of China (PRC) Advanced-Computing Integrated Circuits (ICs) (May 13, 2025)
This Guidance alerts industry to the risks of using PRC advanced-computing ICs, including specific Huawei Ascend chips, that were likely developed or produced in violation of U.S. export controls. The Guidance advises that the use of ICs that meet the parameters of ECCN 3A090 that have been developed or produced by companies located in, headquartered in, or whose ultimate parent company is headquartered in a D:5 country (including PRC) or Macau, may implicate the EAR’s GP10. The Guidance provides the following non-exhaustive list of PRC 3A090 ICs subject to the presumption that GP10 restrictions apply:
- Huawei Ascend 910B
- Huawei Ascend 910C
- Huawei Ascend 910D
The Guidance states that all 3A090 ICs designed by companies located in, headquartered in, or with an ultimate parent company headquartered in PRC (whether produced within or outside the PRC) likely are subject to the EAR and may have been produced in violation of the EAR, subjecting them to GP10 restrictions. Such chips likely are either designed with certain U.S. software or technology or produced with semiconductor manufacturing equipment that is the direct product of certain U.S.-origin software or technology. Also, such ICs may have been produced, purchased, or ordered by an entity on the Entity List with a Footnote 1 or 4 designation, or such entities were parties to the transaction.
The Guidance states that if a party intends to take any action with respect to a PRC 3A090 IC for which it has not received authorization from BIS, the party should confirm with its supplier, prior to performing any of the activities identified in GP10, that authorization exists for the export, reexport, transfer (in-country), or export from abroad of (1) the production technology for that PRC 3A090 IC from its designer to its fabricator, and (2) the PRC 3A090 IC itself from the fabricator to its designer or other supplier.
The Guidance also states that BIS will not pursue enforcement actions against parties that obtain a PRC 3A090 IC solely for the purpose of technical analysis or evaluation (such as destructive testing) to determine the technical capabilities of an individual IC.
