The United States has moved to close a regulatory gap that may have allowed advanced AI chips to reach Chinese-linked firms overseas despite export restrictions.
The U.S. Department of Commerce on Sunday moved to close a potential loophole it had created nearly a year earlier, which may have allowed companies to export some of the world’s most advanced chips, including Nvidia’s Rubin and Blackwell processors and AMD’s MI350x, to Chinese-linked entities operating outside China.
The surprise guidance suggests that, despite broader U.S. efforts to restrict China’s access to cutting-edge semiconductors for artificial intelligence, top-tier chips may have been reaching overseas subsidiaries of Chinese firms in locations such as Malaysia for much of the past year.
The updated policy, published on the Commerce Department’s website, makes clear that export licence requirements will now apply to Chinese-headquartered entities regardless of where they are based.
It remains unclear how many chips were exported during the period in which the regulatory gap existed. However, one industry source with detailed supply chain knowledge estimated the figure could be in the hundreds of thousands.
The Commerce Department has not immediately responded to requests for comment. NVIDIA and AMD also declined to comment.
The apparent loophole emerged after the Department announced in May 2025 that it would not enforce the AI Diffusion rule introduced in the final days of the Biden administration, which governed global access to advanced AI chips.
Chris McGuire, a technology expert and former U.S. State Department official, described the situation as serious, warning in a social media post that the gap enabled overseas subsidiaries of Chinese firms to purchase Nvidia Blackwell chips without a licence. He added that such acquisitions were likely made at scale.
Despite the tighter restrictions, the new guidance does not require data centres to halt operations using these chips, nor does it mandate the suspension of servicing for advanced computing systems, such as servers that are already in use.
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