US Tightens Restrictions on Nvidia Chip Shipments to Chinese Overseas Firms

The US Department of Commerce has taken steps to close a loophole that emerged about a year ago, which may have allowed companies to export some of the world's most advanced chips to Chinese entities based outside China.

New, unexpected guidelines issued on Sunday indicate that top American artificial intelligence chips, including Nvidia's highly advanced Robbin and Blackwell processors and AMD's MI350X, might have been shipped to subsidiaries of Chinese AI firms in countries such as Malaysia for nearly a year. This occurred despite extensive US efforts to restrict Chinese companies' access to semiconductors essential for developing critical AI capabilities.

The new directives were published on the Commerce Department's website on Sunday.

It remains unclear how many chips were exported during the year in which the administration of former US President Donald Trump left the door open for such shipments.

A source in the semiconductor sector familiar with the supply chain estimated the number to be in the hundreds of thousands.

In an unusual move earlier this week, the Commerce Department announced it would impose licensing requirements on advanced chip exports to entities headquartered in China, even if those entities operate outside Chinese territory.

The Commerce Department has not yet responded to a request for comment.

Neither Nvidia nor AMD has replied to requests for comment.

The Commerce Department created this loophole in May 2025 when it declared it would not enforce the AI chip export control rule issued during the final days of the Biden administration. That rule had regulated global access to AI chips.

Technology expert and former State Department official Chris McGwire described the situation on social media Sunday as "a huge problem." He explained that the loophole allowed overseas subsidiaries of Chinese companies to purchase Nvidia Blackwell chips without a license.

He added, "Chinese companies are likely buying these chips in large quantities."

The new guidelines do not require data centers to stop using the chips or to discontinue services relying on advanced computing components such as servers.