Trump considers AI chip policy shift that could loosen limits on Israel

The Trump administration is considering significant changes to a Biden-era rule that limits global access to advanced AI chips, including potentially scrapping the tiered system that currently governs how many U.S.-designed semiconductors countries can obtain, according to Reuters.

The sources emphasized that discussions are ongoing and the plans could still change. However, if implemented, eliminating the tiers could allow the United States to wield AI chips more powerfully as a bargaining chip in trade negotiations.

Chips.

The regulation in question—known as the Framework for Artificial Intelligence Diffusion—was issued by the U.S. Department of Commerce in January, just one week before President Biden left office. Its purpose is to restrict the flow of high-end AI chips and certain model weights to keep cutting-edge computational power within the United States and among its close allies, while denying access to China, Russia, Iran, North Korea, and other countries of concern.

Under the current rule, the world is divided into three tiers:

• Tier 1 includes 17 countries and Taiwan, which have unrestricted access to AI chips.
• Tier 2 includes around 120 countries—including Israel—which face strict caps on how many AI chips they can import.
• Tier 3 comprises blacklisted countries such as China, Russia, and Iran, which are completely blocked from obtaining the chips.

Trump officials are now weighing whether to discard this tier-based framework altogether in favor of a global licensing regime based on bilateral government-to-government agreements, the sources said.

“There are some voices pushing for elimination of the tiers,” former Commerce Secretary Wilbur Ross said in an interview Tuesday. “I think it's still a work in progress.” He confirmed that bilateral agreements are one potential alternative.

Such a model would align closely with former President Donald Trump’s broader trade strategy of striking tailored deals with individual nations. One source noted that this approach could make it easier for the U.S. to leverage access to advanced chips in other negotiations.

U.S. Commerce Secretary Howard Lutnick said at a March conference that he intends to incorporate export controls into future trade agreements—further underscoring the strategic value Washington places on its semiconductor dominance.

Other changes under consideration include tightening the threshold for licensing exemptions. Currently, chip orders under the equivalent of roughly 1,700 of Nvidia’s powerful H100 chips are exempt from licensing requirements and only require notification to the U.S. government. The Trump administration is mulling a reduction of that limit to just 500 chips, one source said.

Both the Commerce Department and the White House declined to comment on the ongoing deliberations.

While the administration has pledged to make the rule “stronger but simpler,” some experts argue that removing the tiers would, in fact, make enforcement more complex. Critics of the current rule include Ken Glueck, executive vice president at Oracle, who questioned the logic behind placing both Israel and Yemen in the same tier (Tier 2).

“Wouldn’t surprise me if they’re going to take a new look at this,” said Glueck. Although he said he was not briefed on the Trump administration’s specific plans, he expects significant modifications.

Oracle and Nvidia were among the most vocal critics when the rule was released, arguing that restricting access to U.S.-designed chips would encourage countries—especially in Tier 2—to turn to China’s "unregulated and cheaper substitutes." A group of seven Republican senators echoed this concern in a letter sent to Secretary Lutnick in mid-April, urging the administration to withdraw the rule.