The policy change could make it easier for AI chip companies to sell into the Middle East

Shares of Nvidia closed up 3.1% Wednesday after a report that the Trump administration is not planning to implement AI diffusion rules.

Shares of Nvidia Corp. climbed toward the end of trading Wednesday after a report that the Trump administration is not planning to implement artificial-intelligence rules controlling chips shipments that was introduced by the Biden administration.

The AI diffusion rules, which had been slated to go into effect May 15, are likely to be rescinded as President Donald Trump develops his own semiconductor restrictions, though he’s yet to make a final decision, Bloomberg News reported.

Meanwhile, Trump said on Wednesday that he is planning to announce a decision on making it easier to export microchips to countries in the Middle East, Reuters reported.

“We might be doing that, yeah,” said Trump, who is preparing to travel to Saudi Arabia and other Gulf countries next week.

The Trump administration has reportedly considered pulling back on restricting sales of Nvidia’s chips to the United Arab Emirates, according to Bloomberg.

Shares of Nvidia, which hasstrongly opposed the proposed rules, closed up 3.1% shortly after the report. The chip maker called the rules “misguided” after they were introduced during the last week of the Biden administration in January.

While Trump has strengthened the restrictions on AI chip sales to China, which he sees as a national-security threat, the AI diffusion rules drafted under the Biden administration were set to apply to a wide variety of countries and trading partners.

“While cloaked in the guise of an ‘anti-China’ measure, these rules would do nothing to enhance U.S. security,” Ned Finkle, vice president of government affairs at Nvidia, said in a statement in January. “The new rules would control technology worldwide, including technology that is already widely available in mainstream gaming PCs and consumer hardware. Rather than mitigate any threat, the new Biden rules would only weaken America’s global competitiveness, undermining the innovation that has kept the U.S. ahead.”

Under the proposed policy, called the Framework for Artificial Intelligence Diffusion, countries — including U.S. allies — are divided into three tiers outlining how many chips they can import, where chips can be deployed and how countries would partner on AI development. 

In addition to tech companies, foreign government officials had been pushing the Trump administration to rethink some of the restrictions due to concerns over how it would negatively impact AI development and investment opportunities, Bloomberg previously reported. 

For example, Polish officials were reportedly concerned over how the proposed compute-power limits would impact major data-center investments from Google and Microsoft. 

“The Biden AI rule is overly complex, overly bureaucratic and would stymie American innovation,” the U.S. Commerce Department’s Bureau of Industry and Security said in a statement shared with MarketWatch. “We will be replacing it with a much simpler rule that unleashes American innovation and ensures American AI dominance.”

The Trump administration is reportedly crafting new rules that would still control cutting-edge chip shipments abroad, and will enforce existing chip export controls in the meantime, according to Bloomberg.