U.S. closes loophole to block advanced AI chips reaching China abroad

The Commerce Department moved to close a loophole that may have let advanced American AI chips reach Chinese companies through subsidiaries and operations outside mainland China, sharpening Washington’s effort to police not just exports but workarounds.

The Bureau of Industry and Security said license rules apply to advanced computing items shipped to entities headquartered in Country Group D:5 or Macau, or to entities whose ultimate parent is headquartered there, even if those buyers are located elsewhere. That means Chinese-headquartered firms operating in places such as Malaysia can still face U.S. licensing requirements when they try to buy restricted chips abroad.

The guidance, posted on the Commerce Department’s website in an unusual weekend action, names some of the most powerful processors in the market, including Nvidia’s Blackwell and Rubin chips and AMD’s MI350x. One chip industry source estimated the number of chips involved could run into the hundreds of thousands, though the government did not confirm that figure.

BIS said the preexisting license requirement dating to November 2023 remains in effect for these entities. The agency framed the step as a clarification after it decided in May 2025 not to enforce the Biden-era AI Diffusion Rule, which had been issued on January 15, 2025 and was due to take effect on May 15, 2025. That rule drew pushback from U.S. allies and domestic AI industry leaders because it would have broadened controls on advanced computing and created a new authorization process for building data centers abroad.

The new move does not require data centers already using the chips to stop operating or servicing the hardware. Even so, it tightens the screws on future access and signals that Washington is focusing on the channels most likely to keep advanced chips flowing into China despite U.S. restrictions.

The latest step follows another policy shift on January 13, 2026, when BIS said it would review export licenses for Nvidia H200, AMD MI325X and similar chips on a case-by-case basis if security conditions were met. Under Secretary for Industry and Security Jeffrey Kessler said then that “export controls should evolve with technology while protecting national security.”

For Nvidia and AMD, the stakes are substantial. The guidance goes after overseas routes that may have helped Chinese buyers bypass U.S. rules, and it lands as global supply chains, national security concerns and competition over frontier AI systems continue to converge. For Washington, it is another sign that the chip-control regime is not being relaxed, but refined to catch the channels that remained open.