The Bureau of Industry and Security (BIS) announced it was rescinding the Biden administration's AI Diffusion Rule, the tiered global licensing framework for advanced AI chips and related tooling that had been set to take effect in 2025. In May 2025, BIS said it would not enforce the rule's new worldwide compliance requirements.

But that rescission did not eliminate export controls on advanced chips. On May 31, 2026, BIS issued guidance clarifying that a license requirement for advanced computing items shipped to entities headquartered in, or with parent companies headquartered in, Country Group D:5 or Macau — a rule that predates the AI Diffusion Rule and traces back to November 17, 2023 — remains in force and continues to be enforced, even though the broader diffusion framework it was folded into has been repealed.

Why it matters

Chipmakers, cloud providers and data-center operators need clarity on which export licensing rules survive policy reversals, because getting it wrong risks steep civil and criminal penalties under the Export Administration Regulations. The overlapping timeline — a 2023 rule folded into a 2025 rule that was rescinded, with parts of the original 2023 rule still standing — illustrates how volatile chip export policy has become as the U.S. tries to balance national-security restrictions on China with the commercial interests of Nvidia, AMD and other suppliers.

How the rule works

Under the Export Administration Regulations, advanced computing items covered by Export Control Classification Numbers 3A090 and 4A090 require a license before export to certain destinations or end users. The November 2023 rule created an end-user control in Section 744.23(a)(3) targeting entities headquartered in Country Group D:5 (a category covering most of mainland China and other restricted destinations) or Macau. When the January 2025 AI Diffusion Rule moved that requirement into a new worldwide licensing section, 742.6, it broadened the scope significantly. BIS's May 2025 non-enforcement decision paused the newly broadened parts of that framework, but its May 2026 guidance confirmed the original, narrower D:5/Macau licensing requirement under Section 742.6(a)(6)(iii)(A) continues to apply and must still be licensed.

Evidence

BIS's own guidance document, dated May 31, 2026, states plainly that exporters “should continue to seek BIS licenses” for advanced computing transactions involving D:5- or Macau-headquartered entities, and that its non-enforcement policy does not extend to that pre-existing requirement. Trade lawyers tracking the guidance noted that BIS “muddies the water” by reintroducing caveats into what had looked like a blanket non-enforcement stance, according to a June 1, 2026 analysis from trade counsel Lindsay Bernsen Wardlaw.

The competing read

The administration has framed the rescission of the AI Diffusion Rule as removing an overly bureaucratic tiered licensing system that disadvantaged U.S. chipmakers competing for global AI infrastructure business without meaningfully slowing China's chip access. Export-control advocates and some China hawks in Congress have countered that walking back the diffusion framework, even while keeping narrower rules in place, risks loosening the guardrails needed to prevent advanced U.S. chips from reaching restricted end users through intermediaries.

What happens next

Exporters and data-center operators are watching for further BIS guidance clarifying enforcement boundaries, and for whether Congress moves to codify chip export restrictions in statute rather than leaving them to executive-branch rulemaking that can be reversed or narrowed by a change in administration.