Washington Tightens Nvidia Chip Ban, Closing Backdoor to China

The United States government has once again tightened export restrictions on artificial intelligence (AI) chips to China. Washington is now closing the loophole that previously allowed Chinese companies to obtain the most advanced Nvidia and AMD AI chips through subsidiaries operating outside the country.

Through new guidance published by the Bureau of Industry and Security (BIS) under the US Department of Commerce, companies headquartered in China must now comply with US export licensing rules even when operating through subsidiaries or affiliates in other nations. The US government emphasised that this policy is not a new ban, but rather a reinforcement of export controls that have been in effect since 2023.

US regulators have previously noted that gaps remained, allowing Chinese firms to procure advanced AI chips via overseas-based affiliates. “The BIS is issuing guidance that clarifies export licensing requirements that have been in place since 2023. The BIS will continue to strictly enforce export controls to protect critical American technology,” stated a BIS spokesperson.

This move closes a regulatory gap that emerged after the previous US administration failed to implement stricter AI Diffusion Rules. Consequently, for nearly a year, Chinese companies were allegedly able to access high-end AI chips through their overseas entities without requiring specific export licences. According to a Reuters report, a semiconductor industry source estimates that this loophole may have enabled the shipment of hundreds of thousands of AI chips to Chinese companies via indirect routes during this period.

The affected chips are not ordinary products. The latest restrictions include the most advanced AI chips currently used to train and run large-scale generative AI models, including the Nvidia Blackwell family, the upcoming Nvidia Rubin generation, and the AMD MI350X AI accelerators. These products are essential components for technology companies building AI data centres and developing next-generation AI models that require massive computational power. Washington’s concerns arose following indications that several Chinese AI companies were gaining access to advanced AI chips through their international operations.