US closes loophole, requires licenses for AI chips to China

The United States has moved to close a significant regulatory loophole that for nearly a year may have allowed advanced artificial intelligence chips from American companies to reach Chinese firms through their overseas subsidiaries. The new guidance, posted on the U.S. Department of Commerce website, will now enforce licensing requirements for the sale of advanced AI semiconductors to any entity headquartered in China, regardless of its physical location abroad.

This action addresses a policy gap created in May 2025 when the Commerce Department announced it would not enforce a specific rule governing global access to AI chips. That decision, according to analysts, enabled overseas subsidiaries of Chinese companies to purchase cutting-edge chips like Nvidia’s Blackwell and Rubin processors and AMD’s MI350x without a U.S. license. One industry source estimated that hundreds of thousands of such advanced chips may have been exported through this channel over the past year, with subsidiaries in countries like Malaysia and Thailand serving as key conduits.

The latest guidance does not require data centers to stop using chips already installed or to cease servicing related computing...