US Moves to Block Nvidia AI Chip Sales to Chinese Firms Overseas
The U.S. Department of Commerce took action to address a potential loophole that it had established a year ago, which could have allowed companies to export the most cutting-edge chips globally — including Nvidia's advanced Rubin and Blackwell processors, in addition to AMD's MI350x — to Chinese organizations situated outside of China.
The surprising information indicates that the leading AI chips from the United States may have been reaching the subsidiaries of Chinese AI companies located in regions such as Malaysia for nearly a year, despite wider U.S. initiatives to restrict Chinese firms' access to the semiconductors essential for advancing important AI technologies.
The updated guidance was uploaded to the Commerce Department’s website on Sunday.
The exact number of chips exported in the year the Trump administration left the door open is unknown. A source in the chip industry with extensive supply-chain insight estimated the figure to be in the hundreds of thousands.
In an uncommon weekend announcement, the Commerce Department stated it would implement licensing obligations for advanced chips to companies based in China, regardless of whether the companies were situated outside of China.
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The Commerce Department made the opportunity available when it revealed in May 2025 that it would not be implementing the AI Diffusion rule established in the final days of the Biden administration. The regulation controlled worldwide access to AI chips.
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Chris McGuire, a technology expert and former State Department official, said in a social media post on Sunday: “This is a HUGE problem.” He said the loophole allowed the overseas subsidiaries of Chinese companies to buy Nvidia Blackwell chips without a license.
According to McGuire, these chips have likely been purchased on a large scale by Chinese firms.
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In a different turn, the updated guidance does not mandate data centers to cease using the chips or to terminate service to sophisticated computing devices like servers.