US Closes Loophole to Block NVIDIA and AMD High-End AI Chips from Reaching Chinese Firms Abroad

(CNA, Washington, 31st) The US Department of Commerce took action today to close a potential year-long loophole that could have allowed the world's most advanced chips, such as NVIDIA's Rubin and Blackwell processors and AMD's MI350x, to flow to Chinese-funded companies located outside of China. Reuters reported that this sudden guidance indicates that despite US efforts to restrict China's access to semiconductors critical for AI development, the most cutting-edge AI chips may have flowed into China over the past year through subsidiaries of Chinese AI firms in places like Malaysia. This new guidance was posted on the Commerce Department's website today. It is unclear how many such chips were exported during the year the door was left open under the Trump administration. A semiconductor industry source familiar with the supply chain estimates the number could be in the hundreds of thousands. In the guidance, issued in a rare weekend release, the Commerce Department stated it would enforce advanced chip license requirements on entities headquartered in China, even if they are located outside of China. The Commerce Department, NVIDIA, and AMD did not immediately respond to requests for comment. This oversight stems from the Commerce Department's announcement last May that it would not enforce AI chip export control regulations set before the Biden administration left office. The regulations were intended to tier controls by country, keeping advanced computing power in the US and its allies while trying to prevent China from obtaining these technologies in more ways. Tech expert and former US State Department official Chris McGuire noted on social media, "This is a huge problem." He stated that the loophole allowed overseas subsidiaries of Chinese companies to purchase NVIDIA Blackwell chips without applying for a license. He pointed out, "Chinese companies have been purchasing these chips, and it is highly likely they have been purchasing them on a large scale." However, the new guidance does not require data centers to stop using these chips or interrupt related services in high-end computing equipment such as servers.