U.S. President Donald Trump

’s goal of significantly boosting global sales of American AI chips risks being undermined by licensing bottlenecks, staffing attrition and a lack of policy direction at the federal agency that oversees exports of billions of dollars in sensitive U.S. technology.

Within the past year, a small but powerful office nestled within the Commerce Department — the Bureau of Industry and Security — has taken on a growing pile of bureaucratic tasks central to Trump’s economic agenda. Those include vetting

Nvidia Corp.

’s bid to export its coveted processors to the

Middle East

and China and leading a wave of industry probes to decide the scope of his tariffs on sectors ranging from autos to steel.

Yet just as those increased demands weigh on the bureau, it has lost dozens of seasoned employees over the past year, resulting in nearly 20 per cent turnover among rulemaking and licensing staff, according to more than 20 people familiar with the situation, all of whom asked for anonymity to discuss internal matters. Tightened control over individual licenses by top officials and a rudderless policy approach have also slowed the agency’s ability to fulfill the workload, they said.

Compounding those difficulties, the administration’s focus since late February has been on the war in Iran, diverting top officials’ attention from the drive to increase U.S. tech exports that had dominated Trump’s first year back in office. The conflict prompted the postponement until next month of his planned summit with

Chinese President Xi Jinping

, with discussions expected on thorny trade issues such as access to AI chips and rare earth elements.

Taken together, the bureau’s challenges risk affecting a far wider swath of the semiconductor industry as the Trump administration weighs how to create a more formal approach for chip export controls after jettisoning a proposal issued during

U.S. President Joe Biden

’s final days in office. Though the Commerce Department’s most recent attempt at a replacement was withdrawn, any future framework will likely find its effectiveness limited by the efficiency of the bureau behind it.

As it stands, approvals for chipmakers and other companies to ship goods to foreign buyers have been stretching for several months, resulting in billions of dollars in export backlogs, including products slated for U.S. allies, according to an industry letter reviewed by Bloomberg News. Last year, the number of processed licenses fell by roughly 25 per cent across industries exporting everything from firearms and fracking equipment to supercomputers, according to two people familiar with the data.

“These delays undermine U.S. competitiveness and run counter to the administration’s goals,” the Semiconductor Industry Association said in its letter to the Commerce Department.

The logjam threatens to hinder the very industries that Trump said his tariff and tax-cut policies would benefit. In 2025, licenses for exports of older-generation chips and cutting-edge circuits to allies like Canada, Japan and the U.K. took an average of 76 days in the first half of last year, according to data compiled by the Semiconductor Industry Association from members including Intel Corp,

Advanced Micro Devices Inc.

, ASML Holding NV and dozens more.

Those waiting periods were roughly double the average processing time of 38 days in fiscal 2023. That year, the Bureau of Industry and Security processed nearly 38,000 license applications, approving 85 per cent, according to its last annual report. Reports for 2024 or 2025 have yet to be published.

Shortly after the administration took office, licensing officers were instructed to temporarily suspend all license processing. That pause lasted months and was in effect in March 2025, according to a person familiar with the matter and an examination of photos of a licensing officer’s operating procedures document.

Commerce Department spokespeople declined to comment. A person familiar with the bureau’s operations said that processed licenses dropped last year due in part to a 43-day government shutdown and because the number of applications fell by 15 per cent between 2024 and 2025.

Regarding the chip industry’s letter, the person said licences are only required to ship semiconductors to allied countries if the item could be used in missiles or the end-user is on a U.S. blacklist. The agency plans to release the next versions of its annual reports on a timeline comparable to prior versions, the person added.

White House spokesman Kush Desai said the “Bureau of Industry and Security is taking a nimble and hands-on approach to implement the President’s agenda of reshoring key industries back to the United States, cementing American technological dominance, and safeguarding our national security. The days of the federal government lackadaisically rubberstamping decisions with serious implications for our national and economic security ended the moment President Trump took office.”

Industry frustrations

Semiconductor companies have grown increasingly frustrated with what they see as delays, according to several people familiar with the matter. When industry stakeholders raise the issue with Under Secretary of Commerce Jeffrey Kessler, who oversees the bureau, he tells companies to simply call him to have a licence approved, the people said.

The industry’s complaints have put a spotlight on Kessler, including whether his hands-on approach to routine license requests may be fueling the approval backlogs. A well-regarded Washington trade lawyer who studied at Stanford University, Kessler served in the Commerce Department’s International Trade Administration during Trump’s first term and did extensive work on China-related national security issues in the private sector.

In line with predecessors, Kessler’s prior experience was not squarely focused on the complicated policy universe of export controls. His approach to licensing as under secretary, on the other hand, has been far more personally involved than previous leaders.

Each day, the bureau handles more than a hundred licenses, many of them routine, and Kessler’s predecessors rarely weighed in on individual applications, several of the people said. By regulation, the under secretary is responsible for settling a license appeal, but the rules do not indicate a defined role outside the appeal process.

Since last year, Kessler has insisted that he have the ability to review and veto nearly every licence, several people familiar with the matter said. Kessler now has an IT system to expedite those checks and give him the ability to block any license, they added. That level of involvement extends all the way to Commerce Secretary

Howard Lutnick

, who often demands the final word and has delayed everything from chip licenses to department staff travel, several people familiar with the matter said.

At an all-staff meeting in February, Kessler insisted that there was no pause in licensing and that agency statistics show no changes to issuance, prompting audible groans from some attendees, according to people familiar with his remarks.

The person familiar with bureau operations called those accounts from the all-staff meeting and of Lutnick’s involvement false, adding that while the administration has exercised more control over the agency’s work, that has not provoked a license backlog.

Nazak Nikakhtar, who served as Assistant Commerce Secretary for Industry and Analysis and filled the duties of BIS under secretary during Trump’s first term, praised Kessler as “a patriot” who takes national security “quite seriously.”

“He very much knows the steps America needs to take for national security,” said Nikakhtar, who’s now a partner at Wiley Rein and has known Kessler for more than a decade. “At the same time, there’s a time for everything, and right now, we’ve got massive geopolitical issues that are framing the entire relationship with China.”

She lauded Kessler’s move to abandon countrywide chip export caps envisioned by the Biden administration and instead apply what she called more stringent confidential case-by-case license requirements, such as in agreements with Saudi Arabia and the United Arab Emirates. The move “threaded the needle in such a beautiful way,” she said.

Staffing exodus

Approval bottlenecks have also worsened amid a staffing exodus that has gutted the Export Administration, a Bureau of Industry and Security unit that handles companies’ applications for government approval of overseas shipments — especially for sensitive technology.

Nearly a fifth of the 218 employees reflected in Biden’s fiscal 2025 budget request from March 2024 have since left the Export Administration, according to a Bloomberg News review of changes to individuals’ LinkedIn Profiles and the agency’s website, as well as interviews with people familiar with the changes. Across its parent agency, the Bureau of Industry and Security, head count has dropped by 101 employees, or 19 per cent, since 2024, according to the Office of Personnel Management.

“Staffing cuts at BIS reduce the agency’s capacity to draft and revise export control rules, to anticipate and mitigate the unintended consequences of new controls, and to process licenses in a timely manner,” said Jacob Feldgoise, senior data research analyst at Georgetown University’s Center for Security and Emerging Technology. “License backlogs in turn create uncertainty for industry and risk disrupting trade.”

Though the Bureau of Industry and Security did secure a 23 per cent budget increase for fiscal 2026, most of the new funding is set aside for hundreds of new export enforcement roles, rather than for assignments in the Export Administration, which is pivotal to rulemaking and licensing decisions.

BIS’s goal is to have 100 additional staff on board by July, according to the person familiar with the agency’s operations.

For the 12 most senior leadership roles in the Export Administration, all but two have seen turnover since the start of 2025, and some positions have had three different leaders since the beginning of last year, the Bloomberg News review found. Some high-ranking employees have been assigned to fill two roles, after at least 13 departures, retirements or force-outs at the division director, office director or assistant secretary level.

Nine of those officials had worked for the bureau for a decade or more, through both Republican and Democratic administrations. Beyond the name-plated roles, dozens of other employees no longer work for the agency, including several senior advisers and engineers, people familiar with the matter said. Among those, at least 15 licensing officers are gone, some of the people said.

“A lot of BIS’s dysfunction seems to come from administration leadership’s baseless distrust and marginalization of career staff, despite the fact that deep technical expertise is essential to successfully develop and implement effective export control regulations,” said Representative Sydney Kamlager-Dove, a California Democrat and member of the House Foreign Affairs Committee, which has jurisdiction over US export control programs.

Departures and force-outs hit some of the bureau’s most pivotal parts, including the director responsible for the semiconductor licensing process and two directors overseeing sectoral tariff analysis. There’s still no permanent head of the Export Administration, after the nomination of China hawk Landon Heid was rescinded last year. The current acting secretary, Steven Haines, has been tapped for a different role in another part of the Commerce Department.

Personnel losses extend beyond the Export Administration to other parts of the bureau. Since Trump returned to office, about half of a roughly 85-person group dedicated to handling import restrictions with national security rationales has departed or been pushed out, including its executive director and deputy executive director, a person familiar with the matter said. The unit, known as the office of information and communications technology and services, was created by an executive order in Trump’s first term.

The person familiar with agency operations said many of those who departed the bureau were disgruntled workers who didn’t want to change how they did their jobs after Trump took office.

Unclear directions

Another challenge facing the bureau is that its policy making and analysis work has been swept up into high-stakes and often unpredictable negotiations on trade deals and tariffs, leading to reversed decisions and unclear directions for staff, people familiar with the matter said.

After Kessler championed a rule to crack down on subsidiaries of sanctioned companies last October, China launched a sprawling program days later to limit US access to rare earth magnets. Career staff had warned Kessler beforehand that the affiliates rule would be difficult to implement, according to people familiar with the matter. China cited the measure as part of its justification, and the proposal was soon suspended as part of the yearlong trade truce reached by Trump and Xi in October.

The person familiar with the bureau’s operations disputed the account of the affiliates rule roll-out, including the staff warning, calling it a misrepresentation.

Underscoring the difficulties of policy making amid perpetually tense negotiations with trading partners, an office within the Bureau of Industry and Security stood up during the Biden administration to work on country-specific policy and export control engagement with allies, is completely vacant, several people said.

The unit, known as the International Policy Office, had personnel who focused on controls related to U.S. adversaries, including measures imposed on Russia over its invasion of Ukraine. Some U.S. lawmakers fear the hollowing out of a bureau that has become a key tool in U.S.-China and U.S.-Russia relations won’t be easily remedied.

“BIS’s export controls have taken a central role in two critical US foreign policy priorities: winning the AI race and countering Russia’s illegal invasion of Ukraine,” Kamlager-Dove said in a statement to Bloomberg News. “It’s not hyperbole to say that dysfunction in how BIS administers and enforces the controls relevant to those interests poses a serious national security threat.”

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Competition between the U.S. and China for artificial intelligence supremacy illustrates what’s at stake with the relatively small agency vetting trillions of dollars economic activity on national security grounds, said Gregory Allen, a senior adviser at the Center for Strategic and International Studies who studies export controls.

“These people have an extraordinary responsibility,” Allen said. “It is a horrible case of being penny-wise and pound-foolish to not invest in this office.”

Bloomberg.com