US Commerce Department Closes Loophole Letting Chinese AI Firms Acquire Advanced Chips Through Overseas Subsidiaries

The US Commerce Department closes a major loophole that allowed Chinese AI firms to secretly acquire advanced Nvidia and AMD chips through overseas subsidiaries, tying export restrictions to a company's headquarters nationality rather than physical location — though hundreds of thousands of chips may have already slipped through during a year-long enforcement gap.

• The US Commerce Department issues new guidance closing a loophole that allowed Chinese AI firms to acquire advanced Nvidia and AMD chips through overseas subsidiaries in countries like Malaysia.
• The updated rules tie export-license requirements to a company's headquarters nationality rather than its physical location, targeting future chip sales while allowing existing data centers to continue operating and receiving service.
• Hundreds of thousands of advanced chips may have reached Chinese-linked entities abroad during the nearly year-long gap created when the Trump administration declined to enforce the Biden-era AI Diffusion rule, though enforcement of the new guidance remains a key challenge.