U.S. Commerce Department Closes Export Loophole for Advanced AI Chips

On May 31 2026, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued guidance clarifying that export license requirements for advanced AI semiconductors apply to entities headquartered in China even when those entities operate outside Chinese territory. The rule targets Nvidia’s Blackwell and Rubin processors and AMD’s MI350x series.

U.S. Tightens Controls on Nvidia AI Chip ExportsReutersBenzingaUS moves to block advanced AI chip sales to Chinese entitiesHuawei chairman thanks the US for export restrictions on chips, says it supercharged China’s semiconductor industry — Washington’s export controls encouraged Chinese firms to invest in R&D and build t

The 2023 export-license regime was relaxed in May 2025 when the Commerce Department stopped enforcing the AI Diffusion rule, a decision made in the final days of the Biden administration. That created a loophole allowing overseas subsidiaries of Chinese AI firms to acquire high-end chips without a license. Earlier, October 2022 introduced initial export controls on AI chips for military use. The May 31 2026 guidance closes the gap.

Reuters

An unnamed chip-industry source estimates “hundreds of thousands” of advanced AI chips may have been exported through the loophole over the past year. The guidance now covers Nvidia’s Blackwell and Rubin processors and AMD’s MI350x chips.

US moves to block advanced AI chip sales to Chinese entities

BIS said the guidance “clarifies export license requirements that have been in place since 2023” and that it “will continue to enforce export controls rigorously to safeguard critical American technology.” Nvidia said the rule does not change its ability to ship chips because a license is already required. AMD did not comment; TSMC declined comment on the foundry issue.

Reuters

Analyst Chris McGuire called the prior loophole a “HUGE problem” and warned of large-scale chip purchases. He said the new rule still leaves a foundry loophole and does not force data centers to stop using existing chips.

Reuters

The measure aims to block Chinese AI firms from scaling advanced models with military potential, pushing them toward domestic chips and affecting global AI-compute markets, including decentralized GPU marketplaces.

US moves to block advanced AI chip sales to Chinese entities

• “BIS issued guidance clarifying export license requirements that have been in place since 2023.” — BIS spokesperson, U.S. Department of Commerce

U.S. Tightens Controls on Nvidia AI Chip Exports

• “BIS will continue to enforce export controls rigorously to safeguard critical ?American technology.” — BIS spokesperson, U.S. Department of Commerce

Reuters

• “This is a HUGE problem,” — Chris McGuire, Former State Department official, technology-security analyst

Reuters

• “Chinese companies have been buying these chips, very likely at scale,” — Chris McGuire, Former State Department official, technology-security analyst

Reuters

• “This clarification does make clear that Blackwell shipments to China-headquartered companies outside of China are now illegal again—which is good, although obviously we have to see how many shipments have already gone to assess how much damage was done,” — Chris McGuire, Former State Department official, technology-security analyst

Benzinga

BIS will monitor compliance and may enforce actions; the foundry loophole remains open.

Reuters