Home / Technology / US Closes AI Chip Loophole to China
US Closes AI Chip Loophole to China
1 Jun
Summary
- US Commerce Department targets loophole for advanced AI chips.
- Nvidia and AMD chips may have reached Chinese firms outside China.
- Guidance enforces license requirements for chips to Chinese entities globally.
The U.S. Department of Commerce has issued new guidance to close a potential loophole that may have enabled the export of advanced AI chips to Chinese entities located outside China for nearly a year. This guidance, posted on Sunday, addresses sophisticated processors from companies like Nvidia and AMD.
The Commerce Department's unexpected move suggests that top-tier U.S. AI chips could have been rerouted to Chinese firms' subsidiaries in countries such as Malaysia, despite U.S. efforts to limit China's access to semiconductors crucial for AI development. The exact volume of chips exported through this opening remains unclear.
This loophole was inadvertently created in May 2025 when the department announced it would not enforce a rule governing global access to AI chips. The new guidance clarifies that license requirements will be enforced for advanced chips destined for entities headquartered in China, regardless of their physical location. However, the guidance does not mandate the cessation of data center usage or servicing of these advanced computing items.
