Microsoft is pushing the Trump administration to loosen and simplify a new system that would restrict the sales of cutting-edge U.S. artificial-intelligence chips to much of the world.

The details

In a blog post that is scheduled to be released Thursday, Microsoft will call for Trump’s team to ease the limits on chips that can be used in data centers for training AI models so they no longer apply to a group of U.S. allies including India, Switzerland and Israel, company officials said. Those countries are in the second tier of a three-tier system that underpins the export controls.

Microsoft says the unintended consequence of that proposed system would be that allies facing limited U.S. chip supply would turn to China to get the tech infrastructure they need.

China is using the proposed rule to argue to other countries that it would be a better long-term partner for AI infrastructure than the U.S., Microsoft President Brad Smith said in an interview. 

“Their message is these countries can’t rely on the U.S., but China is willing to provide what they need,” he said. “That is not good for American business or American foreign policy.” 

DeepSeek, the Chinese company that took many U.S. lawmakers and companies by surprise when it recently released an advanced AI model, is one of seven Chinese startups Microsoft views as having strong potential, Smith said. 

The context

Microsoft’s giant global business depends on an open flow of products and services. It has data centers and customers around the world.  

The previous administration proposed the chip-control rules in the final days of Joe Biden’s presidency to limit China’s AI capabilities. Trump’s team is now reviewing them and considering feedback from industry groups before deciding how to move forward. 

The request from Microsoft highlights the challenge Trump faces trying to enact pro-business policies while also looking tough on China. In the previous administration, national-security officials became frustrated that those sympathetic to businesses selling abroad often delayed or watered down their actions. 

What’s next

Trump administration officials are weighing steps to strengthen the restrictions while simplifying the export-control rules, according to people familiar with the matter.

Smith said Microsoft is in favor of some aspects of the rules, such as some of the export-licensing requirements and the system’s third tier of countries that would be fully locked out of AI chips—including China, Iran and North Korea.

Tech companies are increasing their lobbying efforts in the new administration after many executives donated to Trump’s inauguration and visited him at his Mar-a-Lago club in Florida. Microsoft has been quieter than many of its peers, though Chief Executive Satya Nadella did visit Trump at Mar-a-Lago. 

Another company that has been vocal about export controls is Nvidia. The AI chip giant has called the proposed rules “sweeping overreach.”