U.S.-based chip manufacturing giant Advanced Micro Devices (AMD) has recently gotten license clearance and approval from the U.S. Department of Commerce to proceed with exporting its Instinct MI308 artificial intelligence (AI) chips to China.
AMD’s MI308 chip, designed for data centers and large-scale AI networks, was caught in the crosshairs of the brewing U.S.-China technology rivalry that eventually resulted in a trade war. The trade war, involving a tit-for-tat tariff imposition on both country’s imports, later bleeded into the U.S. taking drastic steps in order to protect its technological advancements and to not allow China lead the AI race.
It is for this reason that the AI Diffusion rule, put in place by the Former U.S. President Joe Biden, was discontinued. The AI diffusion rule created a three-tiered system that limited the exports of U.S.-manufactured AI chips to countries in the world. The main purpose of this measure was to stop high-end AI chips from falling into the hands of countries like China and Russia. However, Trump’s discontinuation of the rule did not also allow for China to still have access to U.S.manufactured AI Chips.
Instead, the Trump administration in alliance with the U.S. Department of Commerce came up with a system that required one-on-one negotiation with each and every country who wants access to chips manufactured in the U.S., as is evident in the way the U.S. loosened its AI chips rule only to the UAE back in May.
It is important to note that before this, the U.S. Department of Commerce, during the heat of the trade war, had added over 80 Chinese companies into the U.S. Entity List, unofficially known as the “American Blacklist.” American companies, especially in the AI industry, were also told to not have any trade relationship with China. It was during this period that Trump turned towards investing heavily into building infrastructures needed to develop AI, therefore entering the AI race with China.
Shortly after all of these, representatives of both countries then agreed to a 90-day halt in the trade hostilities, which is supposed to run till August 12, 2025. It can be argued that this 90-day halt allowed for the U.S. to revisit the trade war-induced measures that were put in place during the heat of the moment. Case in point: this reversal of the export restrictions on U.S.-manufactured AI chips.
This export freeze actually caused harm to companies who were heavily producing AI chips and selling to China, as China relied heavily on them. For instance, AMD was reported to have lost about $800 million during the freeze, while Nvidia, another top AI Chip manufacturer, reported a loss of about $5.5 billion.
Upon the reporting of this license review, AMD’s shares went up 6.41%, while Nvidia went up 4.04%.
But the resumption of these case-by-case license reviews does not fully guarantee blanket approval for all future AI chips shipments. In AMD’s case, each MI308 accelerator batch destined for China must face regulatory scrutiny, and the U.S. authorities retain full discretion to reduce quantities or outrightly deny licenses should national security concerns arise. Industry analysts believe that this move would at least allow these companies to recover much of their revenue at risk.
Also, during the trade war, we saw an emergence of two powerful economic blocs that brought the global supply market to a standstill which resulted in the loss of billions of dollars. However, we are now witnessing these countries come back together to mend the diplomatic relationship between them.
As such, this move highlights a growing recognition that absolute bans may be less effective than leveraged, tailored controls that protect core interests while keeping economic and diplomatic lines open.
