The Commerce Department is preparing further regulatory action covering artificial intelligence and semiconductors, Under Secretary Jeffery Kessler told lawmakers on July 14, 2026. The remarks matter to chipmakers, cloud providers, and exporters because they signal another change in U.S. export control policy, although the department has not disclosed the rules’ scope or timing.
Key Takeaways
- Commerce Department official Jeffery Kessler confirmed that further regulatory action involving AI and semiconductors is under development.
- Commerce does not plan to issue a direct replacement for the rescinded Biden-era AI Diffusion Rule.
- No proposed rule, implementation timeline, or detailed compliance framework was released at the hearing.
- Semiconductor companies, cloud providers, exporters, and AI infrastructure businesses may need to review future Commerce Department guidance.
The Commerce Department is developing a new regulatory approach for artificial intelligence and semiconductor exports, according to remarks made before Congress by Jeffery Kessler, the under secretary of commerce for industry and security.
“There will be future regulatory action in the area of chips and AI,” Kessler told members of the House Foreign Affairs Committee on July 14. He did not identify when the measures would be released or which products, countries, or transactions they might cover. ement gives businesses an early indication that additional U.S. AI and semiconductor regulations are coming. It does not, however, change current export requirements or establish new compliance obligations on its own.
Commerce Prepares a Different AI Export Framework
Kessler’s remarks clarify that the administration does not plan to directly replace the Biden-era Framework for Artificial Intelligence Diffusion.
The Commerce Department announced in May 2025 that it was rescinding that rule before its compliance requirements took effect. The Bureau of Industry and Security, commonly known as BIS, also instructed enforcement officials not to enforce it. ime, BIS said it intended to formalize the rescission and issue a replacement rule. Kessler’s July 2026 testimony indicates that the department has since moved away from a direct replacement while continuing to develop other measures covering AI and advanced chips. inction matters because the withdrawn diffusion framework would have created broad international controls on certain advanced computing chips and AI model weights. It would also have imposed different access levels based on countries and approved end users.
Commerce has not disclosed whether its next approach will use similar country classifications, establish new licensing thresholds, or focus more narrowly on specific chips, customers, or end uses.
The AI Diffusion Rule Remains Rescinded
The original AI Diffusion Rule was issued in January 2025 and was scheduled to introduce compliance requirements beginning May 15, 2025.
Commerce announced its rescission on May 13, 2025. The department said the framework could have restricted access to U.S. technology in partner countries while creating extensive new requirements for companies.
The rescission did not represent a broad withdrawal from AI chip export oversight. BIS simultaneously issued guidance addressing Chinese advanced computing chips, AI model training, and efforts to prevent restricted semiconductors from being diverted through third countries or intermediary businesses. s latest statement suggests that federal officials are continuing to evaluate how export controls should apply to AI computing hardware without recreating the withdrawn framework in its previous form.
Semiconductor Controls Remain Under Congressional Scrutiny
Kessler made the announcement during a hearing examining the Bureau of Industry and Security’s fiscal year 2026 budget, export controls, and competition over artificial intelligence technology.
Lawmakers also questioned the department’s handling of advanced chip exports to China. The hearing addressed licensing decisions involving Nvidia H200 processors, enforcement against restricted Chinese companies, and the risk that controlled chips could reach unauthorized users through subsidiaries or other channels. estions reflect the growing overlap between national security policy and commercial semiconductor markets. Advanced processors support AI model training, cloud services, scientific computing, and data center operations.
They are also connected to domestic production planning and broader U.S. chip manufacturing efforts. Changes to export policy can affect how manufacturers allocate capacity, structure supply agreements, and evaluate international customers.
The hearing did not resolve how Commerce will balance restrictions on sensitive technologies with the commercial interests of U.S. chip designers and infrastructure providers.
U.S. AI and Semiconductor Regulations Could Affect Several Sectors
The forthcoming measures could affect more than companies that manufacture physical processors.
Chip designers, contract manufacturers, distributors, data center operators, cloud computing providers, and developers of large AI systems may all need to examine the final scope of any rule. Businesses that supply technical services or facilitate cross-border technology transfers could also face additional review requirements.
Current export compliance programs often include product classification, customer screening, end-use reviews, recordkeeping, and license assessments. Companies may need to update those procedures if Commerce changes the products, destinations, or transactions covered by federal controls.
The impact will depend on whether the department introduces a formal rule, new enforcement guidance, revised licensing policies, or a combination of measures.
Businesses are also directing substantial resources toward corporate AI infrastructure spending. Changes affecting access to advanced chips could influence data center construction, hardware procurement, cloud capacity, and the timing of AI deployment projects.
For now, companies remain subject to the export control framework already administered by BIS.
Formal Details Have Not Yet Been Released
Commerce has not published proposed text explaining what the new regulatory action will contain.
Kessler did not announce a release date, public comment period, transition schedule, or compliance deadline during the hearing. The department also did not specify whether the measures would apply globally or focus on transactions connected to particular countries and entities.
The lack of detail limits what businesses can do immediately. Companies cannot determine whether they will need new licenses or revised internal controls until BIS publishes formal documents.
Legal, compliance, supply chain, and government affairs teams can still review their exposure to advanced computing exports. Relevant considerations include customer locations, distributors, overseas subsidiaries, chip specifications, data center projects, and the intended use of exported technology.
Businesses should also distinguish between a public statement about future policy and an enforceable regulation. Kessler’s remarks signal the department’s direction, but they do not create a new legal requirement.
Companies Await the Next Commerce Department Filing
The next significant development is likely to come through a proposed or final rule, a Federal Register notice, updated licensing policy, or new BIS guidance.
Those documents would clarify whether the government plans to control additional semiconductor models, adjust country-based restrictions, strengthen diversion safeguards, or impose new requirements on AI-related transactions.
The July 14 announcement confirms that advanced computing exports remain a policy priority. It also shows that the administration is developing an approach separate from the rescinded AI Diffusion Rule.
Until formal U.S. AI and semiconductor regulations are published, companies must continue following existing requirements while monitoring Commerce Department announcements for changes that could affect international sales, customer reviews, and technology transfers.
Frequently Asked Questions
What Did the Commerce Department Announce?
Commerce Department official Jeffery Kessler said that future regulatory action involving artificial intelligence and semiconductors is being prepared. He did not release the scope, timing, or text of the planned measures.
Who Is Jeffery Kessler?
Jeffery Kessler is the under secretary of commerce for industry and security. He oversees the Bureau of Industry and Security, the Commerce Department agency responsible for administering many U.S. export controls.
Is the Biden-Era AI Diffusion Rule Still in Effect?
No. The Commerce Department announced the rule’s rescission in May 2025 and instructed enforcement officials not to enforce it. Kessler’s July 2026 remarks indicate that the administration does not intend to issue a direct replacement.
Have the New Regulations Taken Effect?
No. The Commerce Department has only confirmed that additional regulatory action is forthcoming. No proposed rule, final rule, or implementation date was announced during the July 14 hearing.
Which Businesses Could Be Affected?
Future U.S. AI and semiconductor regulations could affect chip designers, manufacturers, exporters, cloud providers, data center operators, and AI developers. The actual impact will remain uncertain until Commerce releases formal details.
