U.S. Moves to Block Nvidia AI Chip Exports to Chinese Firms Based Abroad
CNBC reported Sunday that the U.S. Department of Commerce moved to restrict Nvidia AI chip exports reaching Chinese-headquartered companies operating outside China. The weekend guidance targets advanced processors including Nvidia’s Blackwell and Rubin lines, as well as AMD‘s MI350x chip.
A Loophole Left Open for Nearly a Year
The gap emerged in May 2025, when the Trump administration announced it would not enforce the AI Diffusion rule introduced in the final stretch of the Biden presidency. That rule had governed how the world’s most capable AI chips could be distributed globally. By stepping back from enforcement, Washington effectively allowed overseas subsidiaries of Chinese AI companies to procure top-tier processors without obtaining a license. Industry sources told CNBC the volume of chips that moved through this opening could run into the hundreds of thousands.
What the New Guidance Says
The Commerce Department’s Sunday posting states that license requirements will now apply to advanced chips sold to any entity headquartered in China, regardless of where that entity physically operates. Countries such as Malaysia, which host significant Chinese tech firm outposts, fall squarely within the new scope. Neither Nvidia nor AMD responded to requests for comment ahead of publication. The Commerce Department also did not immediately reply.
Background: The AI Diffusion Rule and Its Rollback
The AI Diffusion rule had been designed to prevent adversaries from accumulating the semiconductor firepower needed to build competitive AI systems. Critics argued the Trump administration’s decision not to enforce it created exactly the kind of vulnerability U.S. export controls exist to prevent. Chris McGuire, a technology policy specialist and former State Department official, described the situation bluntly on social media Sunday, calling it a serious problem and noting that Chinese companies had likely been purchasing Blackwell-class chips at scale through their foreign arms.
Data Centers Spared Immediate Disruption
One notable aspect of the new guidance is its limited immediate reach. Existing data center operators are not required to power down equipment or sever access to advanced computing infrastructure already in place. That carve-out limits near-term operational disruption but leaves unresolved questions about chips already delivered. Analysts expect further clarifying guidance as the Commerce Department works to define enforcement timelines.
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