Meta Description: Discover how the US Commerce Department’s new export compliance expectations for AI semiconductors impact businesses, with actionable tips for staying compliant and insights into the evolving regulatory landscape.
The world of artificial intelligence is evolving at breakneck speed, and so are the rules that govern it. On May 13, 2025, the US Department of Commerce’s Bureau of Industry and Security (BIS) unveiled a new set of global due diligence requirements for companies dealing with semiconductors used in AI. While some licensing requirements are being relaxed, the expectations for compliance have never been higher.
Let’s break down what these changes mean for businesses, why they matter, and how you can stay ahead in this shifting landscape.
The New Compliance Landscape: What’s Changed?
The BIS’s latest guidance comes at a pivotal moment, coinciding with major US tech investments in the Middle East and a renewed focus on AI infrastructure abroad. The key shift? While the US is lifting some worldwide license requirements for advanced semiconductors, it’s also raising the bar for due diligence and compliance.
Key Points:
- Stricter Due Diligence: Companies must now thoroughly vet the origin and end use of semiconductors, especially those linked to countries of concern like China and Macau.
- Red Flags and Enforcement: BIS has outlined new “red flags” that could indicate illicit diversion of advanced semiconductors. Ignoring these can lead to serious penalties.
- Selective Licensing: While some countries (like India and Malaysia) will see relaxed restrictions, others—particularly in the Gulf and Country Group D:5—remain tightly controlled.
What Does Due Diligence Look Like Now?
BIS’s guidance is clear: any trade involving semiconductors developed or fabricated in countries of concern carries a high risk of violating US export control regulations. This includes not just sales, but also financing, storage, and transport.
Actionable Tips for Businesses:
- Verify Your Supply Chain: Confirm with suppliers that all necessary BIS authorizations are in place for both the technology and the semiconductors themselves.
- Screen Customers and Partners: Evaluate ownership structures and end users, especially if they’re based in or connected to countries of concern.
- Monitor for Red Flags: Watch for signs like unknown delivery addresses, customers co-located with restricted parties, or data centers lacking the infrastructure to operate advanced semiconductors.
- Notify and Educate: Inform customers that your products are subject to US export controls and may require a license for certain destinations.
End-User and End-Use Restrictions: What You Need to Know
The BIS is particularly focused on preventing advanced semiconductors from being used to train AI models for military or weapons of mass destruction (WMD) purposes in countries of concern. If you know—or have reason to know—that your products could be used this way, you may need a license, and failing to obtain one can result in severe penalties.
Takeaway: When in doubt, seek BIS authorization or legal counsel before proceeding with high-risk transactions.
The Bigger Picture: Policy, Politics, and Industry Impact
These changes are part of a broader US strategy to balance AI innovation with national security. Recent congressional hearings and proposed legislation, like the Chip Security Act, signal ongoing scrutiny of the AI and semiconductor sectors. Meanwhile, the Validated End User program may offer a streamlined path for trusted partners to navigate these complex requirements.
Staying Ahead: Navigating Risks and Opportunities
Rapid policy shifts mean that businesses must stay agile. Here’s how you can position your company for success:
- Stay Informed: Regularly review BIS updates and industry news.
- Invest in Compliance: Build robust internal processes for due diligence and export control screening.
- Engage Experts: Don’t hesitate to consult legal or compliance professionals for guidance.
Summary of Key Points:
- The US is easing some licensing requirements but demanding stricter due diligence for AI semiconductors.
- Companies must screen supply chains, customers, and end uses to avoid violations.
- New red flags and enforcement measures increase the risk of penalties for non-compliance.
- Policy changes reflect a balance between AI innovation and national security.
- Staying informed and investing in compliance are essential for navigating this evolving landscape.
By understanding and adapting to these new expectations, businesses can not only avoid costly penalties but also seize opportunities in the rapidly growing AI sector.