The move reinforces restrictions on advanced semiconductor technology amid rising geopolitical competition in AI.
The U.S. Department of Commerce has moved to tighten restrictions on the export of advanced artificial intelligence (AI) chips, closing what officials and industry experts viewed as a loophole that could have allowed Chinese companies to access cutting-edge semiconductor technology through overseas subsidiaries.
The Bureau of Industry and Security (BIS) issued guidance on Sunday clarifying that export license requirements apply not only to entities located in China but also to companies headquartered in China that operate through subsidiaries abroad. The move is aimed at preventing Chinese firms from obtaining advanced AI processors, including Nvidia’s latest Blackwell chips, through operations based in countries outside China.
The guidance comes amid concerns in Washington that some Chinese technology companies may have been acquiring restricted chips through subsidiaries located in markets such as Malaysia and other regions. A policy paper recently circulated among U.S. officials reportedly warned that existing controls left an opening that could be exploited to secure high-performance AI hardware despite broader export restrictions.
While the exact number of chips that may have been shipped through such channels remains unclear, industry sources suggest that significant volumes could have been involved over the past year. The issue gained attention after the Trump administration decided in May 2025 not to enforce the Biden-era AI Diffusion Rule, which had established licensing requirements governing global access to advanced AI chips.
According to BIS, the latest guidance does not introduce new export controls but instead clarifies regulations that have been in effect since 2023. The agency said it remains committed to enforcing export restrictions to safeguard critical American technologies and limit their use by strategic competitors.
Nvidia stated that the clarification does not affect its existing obligations, noting that the company already faces licensing requirements for shipments of advanced AI chips to restricted entities. However, some experts argue that challenges remain, particularly around ensuring that chip foundries and supply-chain partners can identify whether products are ultimately destined for Chinese-linked organizations through indirect channels.
