US Department of Commerce Blocks Loophole: Prohibits the Export of Nvidia's Top AI Chips to Chinese Subsidiaries Abroad
N.R. Finch
The Commerce Department now requires export licenses for top AI chips sold to Chinese companies regardless of where they operate — closing a loophole exploited for nearly a year that may have let hundreds of thousands of chips slip through.
How did this loophole open in the first place?
The Biden administration issued the "AI Diffusion Rule" late in its term, restricting global access to advanced AI chips.
The Trump administration suspended enforcement of that rule in May this year. This means → the rule stayed on the books, but the gate swung open.
In plain terms = Chinese AI companies could set up subsidiaries in places like Malaysia and buy top-tier chips with no license required.
The loophole lasted nearly a year — how many chips got through?
A chip-industry source with deep supply-chain ties told Reuters the number reached hundreds of thousands of chips, though the exact figure remains unclear.
Chris McGuire, a former State Department technology official, said publicly that Chinese firms "have very likely purchased these chips at scale."
This reflects a basic reality: a near-year-long window is more than enough time for large-scale transfers to happen.
What does the new guidance cover — and what doesn't it?
Covered: exporting Nvidia Rubin and Blackwell series chips, plus AMD MI350x, to any Chinese entity now requires a license — no matter where that entity actually operates.
Not covered: the guidance does not require data centers to stop using chips already purchased, nor does it halt maintenance and support for that hardware.
In plain terms = the rule stops future purchases but does not claw back what's already in hand.
What does this mean for investors?
The restricted list hits Nvidia's and AMD's latest-generation product lines (Rubin, Blackwell, MI350x). This means → controls now target the highest available compute tier, not legacy models.
The Commerce Department, Nvidia, and AMD have all declined to comment, leaving policy direction and corporate response uncertain.
This signals a shift: US chip controls on China are moving from "restrict direct exports" to "seal off indirect channels" — the regulatory logic is tightening.
Content is for reference only, not financial advice.