US Tightens Export Controls to Block AI Chip Flow to Overseas Chinese Entities

The US Department of Commerce took action on Sunday to close a potential loophole that may have allowed high-end semiconductors—including Nvidia’s cutting-edge Rubin and Blackwell processors and AMD’s MI350x—to be exported to Chinese entities operating outside of China.

This unexpected guidance indicates that the most powerful American AI chips may have been routed to subsidiaries of Chinese AI firms in regions such as Malaysia for nearly a year. This occurred despite ongoing US strategies designed to restrict China’s access to the semiconductors essential for developing critical AI capabilities.

The updated directives were published on the US Commerce Department’s official website on Sunday.

While the exact volume of shipments during this period of lax enforcement remains unconfirmed, one supply-chain expert estimates that hundreds of thousands of chips may have been exported.

In the weekend update, the Commerce Department clarified that licensing requirements for advanced chips will now be strictly enforced for any entity headquartered in China, regardless of whether those entities are physically located outside the country.

The Commerce Department has not yet responded to requests for further comment.

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