On January 16th, the Bureau of Industry and Security published new Federal Register regulations that refine their AI computing hardware controls. BIS believes new AI capabilities “will enable malicious actors to engage in activities that pose profound risks to U.S. national security and foreign policy objectives” while indicating that “AI models have the potential to create significant economic and social benefits in the United States and across the globe.” As a result, the new regulations are designed to carefully place the line between the potential threat actors and those who will use AI to advance US or human interests.  

These new rules have effective enforcement dates from May 15th, 2025, through January 2026. Following this notice in the Federal Register, the Trump Administration released an executive order requiring a full review of the US export control system to look at potential loopholes in existing regulations. While the new rules for AI chips are in force, there is the possibility that these regulations change following the review, to be concluded by April 1st.

Tradewin recommends reviewing the proposed changes and their impact on your company. In particular, we would focus on the following:

1. Licensing Requirements and Volume Caps for New Country Groups

• Country Groups - The regulations split export destinations into three distinct country groups for licensing requirements: AIA groups for trusted destinations, Embargoed D:5 countries, and all others.
• Volume Caps - The regulations propose annual volume caps for exports of certain chip types per destination country, with those volume caps set by country group.

• License Exception AIA - Artificial Intelligence Authorization (AIA) authorizes shipments to countries listed on the new list: Supplement 5 to 740, which lists 19 of America’s closest allies, including Taiwan.  Certain conditions must be met to utilize the exception.  The Ultimate Consignee must provide a signed certificate assuring that they will not transfer any of the AI hardware without prior authorization of the US government and that their hardware installation will not support “Infrastructure as a Service” uses in restricted countries.  Sellers are also responsible for providing written notification to their consignee that they are utilizing the exception.
• License Exception ACM - Advanced Compute Manufacturing (ACM) enables design and production supply chains to continue operating by allowing exports to certain eligible private sector manufacturers of advanced ICs for the development, production, and warehousing of the chips themselves.
• License Exception LPP - Low Processing Performance (LPP) introduces a novel way of quantifying the exports of advanced ICs by restricting the cumulative computing power of the exported processors.  It allows any single end user to receive up to 26,900,000 TPP of advanced compute ICs per year (even when shipped by multiple exporters.)  To ensure this is followed correctly, the Ultimate Consignees must sign a statement confirming they understand the exception and provide it to the exporter, who must then give a copy to BIS. 

• Universal VEUs (UVEU) - Entities headquartered in the US and certain allied countries can obtain a single authorization allowing the company to open data centers worldwide.  BIS will require advanced notification of the intention to open a new data center so they have the time to update the location in the VEU list.
• National VEUs (NVEU) - Entities will be able to obtain a single authorization that will allow the company to build multiple data centers within one country. This authorization also uses a cumulative TPP allocation like the LPP exception, but it allows a much larger allocation. Also, the TPP allocation is scheduled to accommodate scaling, with increases in allocation identified over the next five years.

• Changes to .z subparagraphs -  Almost everywhere the .z subparagraph appears, refinements have been made to identify the controlled performance capabilities of the control more precisely.  Additionally, in the Export Administration Regulations (EAR), the ECCN 3A001 has the .z subparagraph added.
• Restrictions to the storage and transfer of training models - BIS has recognized the importance of model weights to the utilization of AI models and has introduced a new control on technology under ECCN 4E091 to restrict the transfer of the ‘parameters’ for the AI model trained to utilize 1026 or more operations.  Weights for unpublished models with 1026 or more operations will be subject to a global licensing requirement. 
• Changes to the term “marketed for data center use” - Previous iterations of 3A090 reduced licensing requirements for advanced computing hardware not “marketed for data center” use.  Presumably, this language was causing delays or diversion, as clarifying notes have been added.  Now, all hardware is presumed to be “marketed for datacenter” use unless it can meet these specific requirements:
  • An authorized designer provides attestation that the performance of IC does not meet the requirements or
  • The party manufacturing the IC is outside D:5 and Macau and attests that the transistor count is below the published thresholds.

• Deep ultraviolet lithography equipment: As semiconductor imprinting technology advances, so do the regulations restricting the cutting edge. The 3 B ECCN control imprinting technology is capable of using the smallest feature sizes or deep-ultraviolet immersion photolithography.
• Not AI, but still important: Controls were added that create licensing requirements for flow cytometers and liquid chromatography equipment.  These come hot on the heels of recent (but long-anticipated) restrictions on automated peptide sequencers now in force.

While we wait to see what happens next, organizations should be mindful of the substantial consequences of export violations and the benefits of utilizing tools provided by regulators to ease business burdens.  Tradewin is dedicated to staying on top of the latest changes and can advise any organization looking to remain compliant or seek a competitive advantage through careful administration.

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