The U.S. Commerce Department took action on Sunday to close a potential loophole created a year ago that could have allowed companies to export some of the world’s most advanced chips, such as NVIDIA State-of-the-art Rubin and Blackwell processors, as well as AMD’s MI350x – for Chinese entities located abroad China.
The unexpected guidance suggests that the best U.S. artificial intelligence chips may have been flowing to subsidiaries of Chinese artificial intelligence companies in places like Malaysia for nearly a year, despite broader U.S. efforts to starve Chinese companies of the semiconductors they need to develop critical artificial intelligence capabilities.
The new guidance was posted on the Commerce Department website on Sunday.
It’s unclear how many chips were exported in the year the Trump administration opened the door. One chip industry source with deep knowledge of the supply chain estimated the number to be in the hundreds of thousands.
In unusual weekend guidance, the Commerce Department said it would enforce licensing requirements for advanced chips on entities based in China, even if those entities are located outside China.
The Commerce Department did not immediately respond to a request for comment.
Nvidia and AMD did not immediately respond to requests for comment.
The U.S. Department of Commerce created an opportunity in May 2025 when it announced that it would not enforce artificial intelligence proliferation rules enacted in the final days of the Biden administration. The rules govern the use of artificial intelligence chips worldwide.
“This is a huge problem,” Chris McGuire, a technology expert and former State Department official, said in a social media post on Sunday. He said the loophole allowed overseas subsidiaries of Chinese companies to purchase Nvidia Blackwell chips without permission.
“Chinese companies have been buying these chips, probably in large quantities,” McGuire said.
Another change is that the new guidance does not require data centers to stop using chips or cut off service from advanced computing items such as servers.
