US Moves to Close Loophole on Nvidia AI Chip Exports to Chinese Firms Abroad

 

US Moves to Close Loophole on Nvidia AI Chip Exports to Chinese Firms Abroad

The U.S. Department of Commerce has issued new guidance aimed at preventing the export of advanced AI chips, including Nvidia’s Blackwell processors, to subsidiaries of Chinese companies located outside China. The move comes amid concerns that hundreds of thousands of these high-end chips may have already reached Chinese-controlled entities in countries such as Malaysia.

The guidance, posted Sunday by the Commerce Department’s Bureau of Industry and Security (BIS), enforces license requirements for entities headquartered in China even if they operate abroad. A BIS spokesperson said, “BIS will continue to enforce export controls rigorously to safeguard critical American technology.”

The new restrictions follow a temporary opening left by the Trump administration, which allowed foreign subsidiaries of Chinese firms to acquire AI chips without a license. Technology and national security experts, including former State Department official Chris McGuire, called the loophole a “huge problem” and warned that it enabled Chinese companies to obtain the chips at scale.

While the guidance restricts exports, it does not require data centers to stop using or servicing affected chips. Nvidia confirmed the guidance does not change its current operations, as the company was already subject to licensing requirements. Semiconductor maker AMD has not yet commented.

The Commerce Department first created the opening in May 2025 by halting enforcement of the AI Diffusion rule, initially introduced in the final days of the Biden administration, which included licensing for global access to AI chips. Observers note that some loopholes remain, such as requirements for foundries like Taiwan’s TSMC to ensure chips are not being produced for Chinese front companies.

The announcement highlights ongoing tensions over AI technology and semiconductors, as the U.S. seeks to prevent the transfer of critical computing capabilities to China while balancing the needs of global tech supply chains.