The recent easing of U.S.-China trade tensions has offered little relief in the AI sector, as Washington doubles down on restricting China’s access to advanced semiconductors and curbing Beijing’s ability to export its own AI chips.

The Trump administration has intensified efforts to block China's progress in the global AI race, warning that foreign companies using Chinese-made AI chips—particularly from Huawei—could face criminal penalties for violating U.S. export controls, FT reported the issue.

The U.S. Commerce Department issued guidance clarifying that Huawei’s Ascend series of AI processors fall under existing U.S. export restrictions. The Bureau of Industry and Security (BIS), which enforces these rules, emphasized on Tuesday that the use of Huawei’s Ascend chips—including the 910B, 910C, and 910D models—likely violates export regulations, as these chips are presumed to have been developed using U.S. technology or software, or manufactured with equipment of U.S. origin.

Officials familiar with the matter noted that this is not a new regulation but rather a clear signal to global companies: working with Huawei’s AI chips may trigger penalties under current U.S. law, which requires hard-to-obtain licenses for any transfer of U.S. technology to restricted Chinese firms.

Huawei has recently begun delivering AI chip “clusters” to domestic clients, claiming performance that surpasses comparable products from nvidia in key metrics such as total compute and memory. However, the chips have yet to gain widespread adoption due to ongoing technology restrictions and concerns over mass production capacity.

U.S. policymakers are growing increasingly alarmed by Huawei’s advancing capabilities and its potential to challenge American dominance in both domestic and international AI markets—much like the competition emerging between China’s DeepSeek and OpenAI. Nvidia CEO Jensen Huang acknowledged last month that Huawei is “one of the most formidable technology companies in the world,” and called for U.S. policy to focus on empowering American firms to remain competitive on the global stage.

Meanwhile, the Commerce Department also rescinded the “AI Diffusion Rule” on Tuesday—a Biden-era measure that had been scheduled to take effect on May 15. That rule was designed to limit the global spread of U.S.-made AI chips, especially to countries like China. However, the Trump administration deemed the rule overly bureaucratic and pledged to introduce a more streamlined replacement in the future.

The announcement coincided with President Trump’s visit to Saudi Arabia, where he revealed a wave of technology deals. Among them was a partnership with the kingdom’s new state-owned AI firm, Humain, which committed to building out AI infrastructure using hundreds of thousands of Nvidia and amd chips.

Despite these measures, U.S. restrictions on Nvidia’s exports to China have continued to escalate—moving from bans on older H100 chips to prohibitions on the latest Blackwell architecture. In response, Nvidia has been developing downgraded alternatives, such as the H20—a less powerful version of the H200—specifically designed to comply with U.S. export regulations.

On Capitol Hill, U.S. lawmakers are pushing further. Last Friday, a bipartisan group of senators introduced the “Chip Security Act,” which would mandate that export-controlled AI chips include location verification systems. The goal is to detect smuggling or unauthorized use, thereby limiting China's access to advanced AI technology.

Ultimately, Washington’s strategy appears clear: to prevent China from acquiring or exporting state-of-the-art AI chips, driven by concerns that models like DeepSeek—comparable to OpenAI’s O1—could help China close the AI gap. At the same time, the U.S. seeks to block China from expanding its global AI influence, further isolating it in the race for technological dominance.