America’s AI chip rules keep changing — and the rest of the world is paying the price

For a policy designed to decide concretely who gets access to the world’s most powerful AI chips, Washington has produced a hell of a lot of uncertainty.

The Biden administration’s Framework for Artificial Intelligence Diffusion was published in January 2025 and was meant to come into force on May 15 that year. But just before that deadline, the Trump administration said it would rescind the rule, ordered officials not to enforce it, promised a replacement, then spent months gesturing at a new framework without actually delivering one. In March this year, yet another planned replacement rule was pulled back.

Chris McGuire, senior fellow for China and emerging technologies at the Council on Foreign Relations — and a former deputy senior director for technology and national security at the US National Security Council between 2022 and 2024 — put it succinctly in an interview with Tom’s Hardware Premium: “The administration has a contradictory policy on this.” So what’s going on?

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AI diffusion rules sit at the heart of the 21st-century power struggle over who gets access to advanced computing, who gets to build frontier AI systems, and how much leverage the U.S. can exert over allies, partners, and rivals. The existence of the rules is meant to improve national security by stopping advanced chips and model capabilities from flowing to adversaries while keeping the U.S. and its closest partners ahead. But in practice, businesses, foreign governments, and analysts have had to develop a sense of strategic improvisation.

Kevin J Wolf, a veteran export controls lawyer at Akin Gump, who previously served as assistant secretary of commerce for export administration in the U.S. government, told Tom’s Hardware Premium that “the Trump administration is just simply not enforcing, as a practical matter, the AI diffusion rule.”

But Wolf drew a distinction between practical and legal enforcement. Export controls usually derive a lot of their force from what is written into the Federal Register, as well as the predictability of the process surrounding those rules.

Companies make billion-dollar investment decisions because they believe Washington, however slow or frustratingly it moves, is coherent. Wolf believes this coherence has broken down. That’s down to the departure of subject matter experts from the White House with the change of administration. “The AI experts, the chip experts, and the tool experts, they were all fired or quit early last year.”

Uncertainty in continuity

Yet there is some element of continuity … sort of. In the absence of a decision by the Trump administration, the Biden-era diffusion framework still exists. But practically, Wolf said, the administration is behaving as though it doesn’t. That leaves exporters, cloud providers, and governments in the position of trying to infer American industrial strategy from Trump’s Truth Social posts and snatched pronouncements from the White House.

“I have no idea what their objective is,” Wolf said. Worse, he added, “there is no 'there' there.” Implying that Trump is not really saying anything of substance on the matter at all.

In theory, the idea underpinning the U.S. AI diffusion policy is simple. “The principal goal was, we want to make sure that as much AI compute around the world as possible is in data centers that we trust,” said McGuire. Chips are the physical bottleneck for building frontier systems and military capabilities — which gives them political leverage.

But if that’s still the goal, the current US policy is doing a strange job of achieving it. Washington seems to want the benefits of control without the administrative state required to exercise it.

Alexander Capri, senior lecturer in the business school at the National University of Singapore believes the U.S. is aiming for containment as well as platform capture. The logic, he said, is that restricting sales too tightly risks “kneecapping American companies” just as Chinese firms are catching up.

That means that rather than trying to deny everyone access, the US is trying to make itself indispensable. “It’s now about building dependence and reliance on America, on the American tech stack,” Capri said in an interview with Tom’s Hardware Premium. The result is more overseas partnerships, more Gulf investment, and more American cloud and chip infrastructure abroad, with the corollary that more countries are tied into a U.S.-led AI ecosystem by commercial necessity.

At the moment, that’s true. American AI chip suppliers retain enormous leverage. “The alternative to US AI chips is not Chinese AI chips,” said McGuire. “It’s no AI chips.” Nvidia, for instance, has an 81% market share by revenue for chips destined for data centers, according to IDC. That power means the US can shape the market, decide which partners get access, and compel companies and countries to build their AI stacks inside an American-designed architecture.

Chaos and confusion

The problem is that leverage only works if it is used coherently. Right now, there’s confusion over what the U.S. is aiming for. Wolf said existing flows appear broadly normal, and for companies already shipping or already operating data centers, business is largely continuing. “The uncertainty is making plans in the future,” said Wolf. “Do we build this data in country X?” he explained. Companies might decide to do so, then find in a month, a week or a year that it’s suddenly embargoed under a Trump administration decision. “No one knows,” he said.

Because of that, some businesses are holding back investment altogether, reluctant to pour billions into overseas capacity that might be trapped by a future rule. But others are doing the opposite, racing ahead to try to make money before Washington changes its mind again. In Southeast Asia, this has produced a mixture of hesitation and acceleration, while also allowing the area to gain more than $55 billion of investment in 2025.

But countries that thought they might become neutral hosts for AI infrastructure have found themselves caught in a geopolitical storm they can’t control. Malaysia and Thailand are attractive because they welcome investment while sitting outside the U.S.’s China embargo. However, it becomes trickier because they can be attractive for the same reason to bad actors looking to route chips somewhere less visible.

McGuire pointed to recent smuggling cases — including the one involving former Super Micro executives (the company itself denies any wrongdoing, and is cooperating with the investigation) — as evidence that is more than a theoretical risk. “This third country diversion problem is real and it’s big,” he said. “The industry is not policing itself right now.”

A status quo… but for how long?

For now, Washington can still rely on the brute fact that the rest of the world still needs American chips. But that window won’t stay open indefinitely, and several of the people watching this closest think the sheer strategic importance of AI will eventually force the White House to stop improvising.

“I think they’re going to have to, because the tech is going to force their hand,” McGuire said. The idea that advanced AI chips can “flow to most countries in the world without the US government having any visibility or insight,” he argued, will soon “seem preposterous.”

Until then, though, the vacuum is itself becoming policy. Wolf said what’s most striking is the absence of the normal Washington machinery around rulemaking. “There are no speeches, there’s no government outreach, there’s no conferences,” he said.

That means there’s no settled doctrine to decode, or no obvious coalition pushing one approach over another, which means there’s no real confidence that anyone inside the administration has fully decided what comes next. For allies, investors and countries trying to build AI capacity without becoming collateral damage, that’s the real lesson of Trump’s chip policy: No one's steering the most important supply chain in tech.