US Commerce Department Announces New Export Compliance Expectations Related to Artificial Intelligence

On May 13, 2025, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) unveiled heightened global due diligence requirements for companies using, granting access to, and trading in semiconductors used in artificial intelligence (AI). It also identified corresponding plans to remove worldwide license requirements on advanced semiconductors. While license requirements are expected to lessen under this announcement, BIS’s expectations of AI industry compliance substantially increase.

BIS’s guidance coincides with President Donald Trump’s visit to the Middle East and significant new public commitments by US technology firms to build out AI infrastructure in the region. Although the details of a new regulation have not been released, together, these actions suggest the Trump Administration’s willingness to encourage AI development outside the United States, while also expecting the AI industry to be significantly more attuned to end users and end uses.

BIS stated that it planned to rescind and would not enforce the worldwide controls on advanced semiconductors and AI model weights that President Joe Biden instituted in the waning days of his term. (Read our Legal Update on the earlier rule). License requirements would be maintained on select countries, including most Gulf states, but lifted for others, including India and Malaysia.

Together with this announcement, BIS released three guidance documents on expected due diligence associated with semiconductors, which outline:

• Due Diligence Guidance:The risks of using semiconductors developed or fabricated in countries of concern, including China, anywhere in the world, including but not limited to Huawei’s Ascend 910B, 910C, and 910D models, because of an inherent presumption that these semiconductors are subject to US jurisdiction;

• Diversion Guidance:New “red flags” that may appear in a transaction, suggesting that illicit diversion of advanced semiconductors may be occurring; and

• Policy Statement on End-User and End-Use Restrictions for Training AI Models:The potential enforcement consequences of providing access to advanced semiconductors and related items when the service provider knows, or has reason to know, that the items will be used to train AI models by or for parties headquartered in specific countries of concern, including China.

The key takeaway from BIS’s guidance is that the US government expects the AI industry—including exporters, re-exporters, and data center operators—to conduct strict due diligence and screening to prevent actions that are newly identified as violations of US law.

Due Diligence Related to Use of Semiconductors

BIS’s guidance advises that engaging in virtually any trade activity involving semiconductors developed or fabricated by companies located in, headquartered in, or whose ultimate parent company is headquartered in China or certain other countries of concern risks a violation of US export control regulations, and may result in substantial criminal and administrative penalties. Among other activities, this includes sale, transfer, export, re-export, financing, storage, and transport.

As a technical matter, the guidance broadly covers all semiconductors classified under Export Control Classification Number (ECCN) 3A090, and (in contrast to the guidance described below) is not limited to the “advanced” semiconductors in ECCN 3A090.a. Countries of concern include China, Macau, and all other countries in Country Group D:5 of the Export Administration Regulations (“EAR”).

To reach this posture, BIS concludes that all such semiconductors “likely” fall within the jurisdiction of the EAR.

While BIS identifies Huawei’s Ascend 910B, 910C, and 910D models as meeting ECCN 3A090’s technical parameters and subject to its guidance, the agency does not limit its warning to these models.

To avoid exposure to a violation of the EAR, any party that seeks to take covered actions with respect to an ECCN 3A090 semiconductor may apply for a BIS authorization to engage in the proposed activity. Alternatively, if a party learns a violation has occurred that it was not involved in and does not otherwise have an interest in, it may submit a General Prohibition 10 waiver request.

BIS recommends confirming with reliable suppliers that a BIS authorization was in place covering the export, reexport, transfer (in-country), or export from abroad of both the semiconductor production technology from its designer to its fabricator, and the semiconductor itself from the fabricator to its designer or other supplier.

Countering Illicit Advanced Semiconductor Transactions

In light of relaxed licensing requirements for advanced semiconductors, BIS also released updated guidance to increase the public’s awareness of advanced semiconductor-related diversion schemes. Through a series of “red flags,” BIS has identified new circumstances in a transaction that indicate the export, reexport, or transfer (in country) may be contrary to the regulations.

Significantly, if any such red flags appear in a transaction and are ignored, BIS may impose liability for a violation of the EAR. Ignoring a red flag may provide evidence of a “reason to know” that a violation of the EAR has occurred or is about to occur.

The newly announced red flags include, for example, if:

• the data center to which the advanced semiconductors or electronic assemblies does not or cannot affirm it has the infrastructure to operate the items;
• the delivery or installation address is unknown; and
• the customer is co-located with or its address is similar to a restricted party.

BIS further provided a list of due diligence steps that companies should take before conducting transactions involving advanced semiconductors and electronic assemblies with new customers, especially those that are located outside of traditional US export control partner countries (i.e., Country Group A:1 of the EAR). These steps include:

• Before engaging in business with either domestic or foreign customers, notify such potential customers that your items are subject to the EAR and require a BIS license if exported, reexported, or transferred (in-country) to destinations for which a license continues to be required (i.e., Country Groups D:1, D:4, or D:5 (excluding destinations also specified in A:5 or A:6) of the EAR);
• Evaluate the customer’s ownership structure to determine if parties are headquartered or have an ultimate parent headquartered in a destination in a country of concern, including China (i.e., Country Group D:5 and Macau); and
• Evaluate data centers to determine whether they have the infrastructure to operate electronic assemblies containing advanced semiconductors with power consumption greater than 10 megawatts. The guidance identifies that these data centers “merit additional scrutiny” because they may be capable of supporting high volumes of advanced semiconductors “for training AI models for or on behalf of parties headquartered in countries of concern, where such activities may support WMD or military-intelligence end uses/end users.”

End User and End Use Restrictions for Training AI Models

Through its policy statement, BIS has identified heightened expectations for the due diligence conducted by exporters, reexporters, and service providers into their customers and their customers’ end uses. BIS announced that access to advanced semiconductors and other EAR-regulated commodities used for training AI models “has the potential to enable military-intelligence and weapons of mass destruction (WMD) end uses” in specific countries of concern, including China (i.e., Country Group D:5 and Macau). In line with this determination, BIS listed a number of activities that now potentially trigger a license requirement under the end-user- and end-use-based provisions of the EAR. 15 C.F.R. part 744.

The following activities may require a license when the provider knows or has reason to know that an AI model will be used for a WMD or military-intelligence end use/user:

• Provision of advanced semiconductors and commodities subject to the EAR when the exporter, re-exporter, or transferor knows or has reason to know that the recipient (e.g., a foreign Infrastructure as a Service (“IaaS”) provider or data center provider) will use the items to train AI models for on behalf of parties headquartered in countries of concern, including China (i.e., Country Group D:5 and Macau);
• Changes of end use or end user of advanced semiconductors and commodities subject to the EAR, when there is “knowledge” that the transferee will use the items to train AI models for on behalf of parties headquartered in countries of concern, including China (D:5 countries or Macau); or
• A US person supports 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.

Persons conducting the activities listed above without a license are subject to potential civil or criminal enforcement action.

Finally, BIS notes that foreign parties acting contrary to US policy interests by training AI models that could support WMD or military-intelligence end use for, or on behalf of, parties headquartered in Country Group D:5 may be listed on the Entity List.

Related Activities

In addition to BIS’s actions, congressional attention has increasingly focused on the AI industry in the last two weeks. Notably, two separate US Senate hearings examined, in part, the impacts of current US trade policy—including tariffs—on the domestic advanced semiconductor and AI sectors.

Further, companion bills introduced by a bipartisan group in the House or Representatives and Senator Tom Cotton, both entitled the Chip Security Act, would require location verification for advanced semiconductors, require that semiconductor manufacturers report and share information on potential diversion, and task the US Department of Commerce with analyzing additional steps to avert diversion.

Finally, a significant volume of AI industry trade was announced this week during President Trump’s trip to Saudi Arabia, Qatar, and the United Arab Emirates. This week’s BIS guidance indicates that AI data center development in the Middle East will continue to be subject to license requirements, although public announcement of these deals in concert with the President’s visit suggests that such licensing will be expedited. To further this objective, certain countries ultimately may change Country Group designations in the EAR.

Final Considerations

BIS’s pronouncements reflect a continued focus on preventing China from accessing AI technology, and the announced recission of the worldwide advanced semiconductor license requirement may suggest that there will be an increased flow of trade in AI technology. However, the significantly increased due diligence requirements for the AI industry and service providers may ultimately lead to an onerous and uncertain process. One middle ground may be identified through the Validated End User program, which was instituted last year to facilitate global operations of trusted data center operators and service providers. Should the Trump Administration continue operation of this program, US hyperscalers and other trusted partners may determine that it provides a clearer route through many of these due diligence requirements.

Rapid changes in AI policy—along with the evolving US regulatory enforcement posture—present both risks and opportunities for the AI industry, and Mayer Brown is well positioned to advise companies in this dynamic sector.