Introduction
On October 3, 2025, the U.S. Commerce Department unveiled a revised export control policy known as the “50 % rule,” extending licensing obligations to any entity that is more than 50 % owned by a party already on U.S. sanctions or export control lists. Axios Though technical in nature, the move has immediate reverberations across the global AI and semiconductor ecosystem. One analyst warned it “could significantly upend how AI firms structure their international relationships.” Axios

Why it matters now

• It reshapes how multinational AI and chip firms manage subsidiary and investment structures
• It tightens U.S. leverage over global AI value chains, especially in relation to China
• It raises compliance burden dramatically and can force reorganizations or divestitures
• It increases geopolitical risk in capital flows, partnerships, and cross-border R&D

Call-out
The “50 % rule” flips the architecture of global AI governance from permissive to protectionist.

Business implications

For AI and semiconductor firms, the new rule demands a revisit of corporate structure, ownership, and international partnerships. Entities whose ownership stakes cross that 50 % threshold now face full U.S. export compliance and licensing obligations—even if the subsidiary was previously considered outside purview. Companies may be forced to spin off, restructure shareholdings, or limit investment exposure in certain jurisdictions. Deals that once seemed innocuous could suddenly require U.S. approval or face denial, slowing down innovation pipelines.

For venture capital and cross-border investors, the risk calculus changes sharply. VC funds with U.S. LPs or U.S. exposure must now scrutinize AI startups’ ownership chains and global subsidiaries more carefully. Investments in Chinese or other regulated markets must account for whether the 50 % rule could pull the U.S. back into the compliance chain. Some deals could get blocked, reworked, or aborted. The rule may chill capital flow into regions where ownership risk is ambiguous.

For governments and policy actors, this move is a strategic weapon in the U.S.’s technology competition playbook. It signals that access to U.S. AI capability and supply chains is conditional not just on location or origin, but on ownership lineage. It gives Washington more gatekeeping power over AI partnerships abroad. Other nations may respond with countermeasures or adopt mirror rules, raising the risk of fragmenting the AI commons.

For customers, integrators, and global enterprises, sourcing models, tools, or chips across borders becomes more complicated. A supplier that becomes subject to the 50 % rule may lose access to U.S. components or licenses, leading to supply disruptions or forcing customers to requalify alternative suppliers. Enterprises will need to audit vendor ownership and compliance posture more intensively and possibly switch to locally owned or neutral providers.

Looking ahead

Near term (6–12 months):
We can expect a wave of corporate restructuring, spinouts, and deal reengineering. AI firms will scramble to reclassify ownership percentages, possibly spinning non‑U.S. units below the 50 % threshold. Some existing partnerships or joint ventures may be unwound or frozen. Legal, compliance, and M&A advisory services will see a spike in demand for “50 % rule readiness” audits.

Long term (2–5 years):
As the 50 % rule becomes baked in, global AI ecosystems may bifurcate—U.S.-aligned architectures operating under strict compliance, and “non- U.S.” chains built to operate independent of U.S. technology. Countries hostile to U.S. influence may accelerate the development of alternative AI stacks, supply chains, and regulatory regimes. Over time, we could see a fragmented world of semi-independent AI blocs with restricted interoperability. Global standards and interoperability efforts will come under strain as compliance regimes diverge.

The upshot
While often overshadowed by more visible headlines, the U.S. Commerce Department’s “50 % rule” is a disruptive tectonic shift. It changes how global AI and semiconductor firms layer ownership, structure deals, and deploy resources across borders. The balance of power in AI is increasingly enforced not just through tariffs or sanctions, but also at the level of corporate shells. Firms that move early to adapt will preserve their agility; those that ignore it risk permanently losing access to U.S. enabling technologies.

References

• “How a wonky Commerce rule could disrupt AI companies,” Axios Axios
• “EU pushes new AI strategy to reduce tech reliance on US and China,” Financial Times ft.com