US Tightens Loophole on AI Chip Exports to Chinese Firms
The US Commerce Department releases new guidelines to close loopholes potentially allowing the export of advanced AI chips from Chinese subsidiaries outside China. The rules, previously less enforced under the Trump administration, now demand licenses for such exports to prevent misuse by Chinese entities.
The United States Commerce Department has announced new guidance aimed at closing a loophole that might have enabled the exportation of sophisticated AI chips to subsidiaries of Chinese companies located outside China's borders, according to a report by Reuters. The policy shift aims to prevent advanced processors like Nvidia's Blackwell from reaching these firms without oversight.
Initially publicized in May 2025, the AI Diffusion rule—implemented during the tail end of the Biden administration—was supposed to regulate AI chip exports, requiring US government-issued licenses as part of a detailed export framework. However, the Trump administration reversed this rule, viewing it as a hindrance to American progress. The extent of exports under these conditions remains unclear, but a source cited by Reuters suggests that substantial quantities of chips were distributed to Chinese companies.
The revised guidance from the Bureau of Industry and Security (BIS) now mandates licenses for exporting these advanced chips to firms headquartered in China. Chris McGuire, a former State Department official with expertise in technology and national security, explained on social media that the absence of enforcement previously allowed Chinese subsidiaries to acquire Nvidia Blackwell chips without needing a license.
Moreover, McGuire highlighted an existing loophole, indicating that BIS's guidance does not require Taiwanese manufacturer TSMC to perform enhanced due diligence on AI chip requests, leaving another major vulnerability unaddressed in US regulations.
(With inputs from agencies.)
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