The U.S. Department of Commerce has taken steps to close a loophole that allowed the export of advanced chips, including Nvidia’s Blackwell processors, to subsidiaries of Chinese firms located outside China. This action comes amid ongoing efforts to restrict access to critical semiconductor technology in China, following the Commerce Department’s decision not to enforce the AI Diffusion rule established by the previous administration, which could have led to hundreds of thousands of chips being distributed without proper licensing. While the new guidance clarifies existing licensing requirements, it does not alter regulations for data centers or impose additional due diligence obligations on foundries like TSMC regarding shipments that could go to Chinese front companies.

Nvidia: Nvidia develops graphics processors and AI accelerators used in data centers and high-performance computing. Its most sophisticated Blackwell processors are the primary chips referenced in the new US export guidance aimed at preventing shipments to overseas subsidiaries of Chinese firms.
Chris McGuire: Chris McGuire is a former State Department official specializing in technology and national security issues. He publicly described the identified loophole as a significant problem that enabled Chinese companies to acquire advanced Nvidia chips without licenses and noted that the new guidance addresses part but not all of the concerns.
US Department of Commerce: The US Department of Commerce oversees trade, economic growth, and export controls through its Bureau of Industry and Security. In this development, the department issued weekend guidance clarifying and enforcing licensing rules for advanced AI chips headed to Chinese-headquartered entities located outside China.

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{
“Export Controls”: “The Bureau of Industry and Security is now enforcing licensing requirements for advanced semiconductors to entities headquartered in China, even if they operate outside of China.”,
“Industry Response”: “The new guidelines do not require data centers to alter their use of advanced chips and do not impose additional due diligence on specific semiconductor foundries for shipments to potential Chinese front companies.”,
“Regulatory Clarification”: “The guidance addresses a potential gap that emerged after the Commerce Department chose not to enforce a previous AI Diffusion rule.”
}
`