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Trump's AI chip export controls could go either way for Korea

Published: 14 May. 2025, 18:36 Updated: 14 May. 2025, 20:06

U.S. President Donald Trump speaks during the Gulf Cooperation Council Summit in Riyadh, Saudi Arabia, on May 14. [AP/YONHAP]

The United States is overhauling its semiconductor export control policy on AI chips, with U.S. President Donald Trump dismantling his predecessor’s tiered approach and using AI chips as bargaining tools in foreign investment talks.

The Trump administration appears to be fully embracing its signature “art of the deal” approach — issuing a strong global warning against the use of Chinese-made AI chips while simultaneously selling large volumes of cutting-edge Nvidia chips to countries subject to export controls.

The U.S. Department of Commerce’s Bureau of Industry and Security announced on Tuesday that it would officially rescind the Joe Biden administration’s AI Diffusion rule, which was scheduled to take effect on Thursday. The rule categorizes countries into three tiers, with corresponding levels of AI chip export restrictions.

Under the Biden-era regulation, AI chips could be exported without restriction to 20 major allies, including Korea and Japan. About 150 countries, including many in the Middle East, faced quantity limits due to concerns over indirect shipments to China. Exports to adversarial countries such as China, Russia, Iran and North Korea were completely banned.

The Commerce Department said in a statement Tuesday that Biden’s regulations would have "stifled American innovation and saddled companies with burdensome new regulatory requirements,” and “would have undermined U.S. diplomatic relations with dozens of countries by downgrading them to second-tier status.”

U.S. President Donald Trump, left, arrives with Saudi Crown Prince Mohammed bin Salman for the group photo with Gulf Cooperation Council leaders during the Gulf Cooperation Council Summit in Riyadh, Saudi Arabia, on May 14. [AP/YONHAP]

At the same time, the United States is tightening pressure on China. The Commerce Department issued new guidelines alongside the rule’s repeal, warning that the use of Huawei’s AI chips anywhere in the world constitutes a violation of U.S. export control regulations.

The move comes amid reports that Huawei has developed AI chips comparable to those produced by Nvidia, signaling a U.S. effort to curb the global spread of Chinese semiconductors.

Going forward, the Commerce Department will retain existing restrictions on advanced chip exports to countries like China but plans to develop new rules that maintain U.S. leadership in AI technology.

The shift marks the beginning of a new diplomatic push, accompanied by a flurry of deals involving U.S. tech giants. While visiting the Middle East on Tuesday, Trump attended the U.S.-Saudi Investment Forum in Riyadh, where Nvidia CEO Jensen Huang pledged to supply 18,000 units of its latest AI chip, the GB300 Blackwell, to Saudi Arabia. Over the next five years, the company aims to deliver several hundred thousand chips. AMD also announced plans to supply semiconductors worth $10 billion.

Trump is scheduled to visit Saudi Arabia, Qatar and the United Arab Emirates and is expected to secure significant investment agreements from these regions, all of which had previously been subject to export controls.

CNBC reported that Nvidia’s AI chips are now being used as a diplomatic negotiation tool by the Trump administration.

Tesla CEO Elon Musk, left, sits with Saudi Minister of Communications and Information Technology Abdullah Alswaha at the Saudi-U.S. Investment Forum, in Riyadh, Saudi Arabia, on May 13. [REUTERS/YONHAP]

Korean companies are closely watching the U.S. policy shift. Samsung Electronics and SK hynix, which supply high-bandwidth memory to Nvidia and AMD, could benefit from relaxed export controls if they lead to expanded orders.

Fabless Korean semiconductor companies targeting the Middle East may also see new opportunities. Rebellions, for example, secured a 20 billion won ($14.3 million) strategic investment from Saudi Aramco last year and is currently supplying AI chips to the oil giant.

Still, Trump’s pursuit of U.S. semiconductor dominance could lead to tighter regulations that may disadvantage Korean firms. If U.S. tech giants expand their market share in the Middle East, domestic fabless chipmakers could see their share of spillover benefits decline.

“This move is largely a political decision aimed at erasing the previous administration’s achievements, which is why we can anticipate the rules to swing back toward stricter controls,” said Kim Yang-pang, a senior researcher at the Korea Institute for Industrial Economics and Trade. “Since export guidelines by chip type have yet to be clarified, premature optimism is ill-advised.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY LEE GA-RAM [[email protected]]