Authored by Evgenia Filiaminova via The Epoch Times,
The U.S. Department of Commerce has issued new guidance to prevent Chinese companies from obtaining advanced U.S. artificial intelligence (AI) chips, such as Nvidia’s most sophisticated Blackwell processors, through overseas subsidiaries.
The May 31 guidance clarifies that export licenses are required for entities headquartered in China or Macau, regardless of where their affiliates are located.
The U.S. Commerce Department’s Bureau of Industry and Security (BIS) said that licensing requirements for advanced computing items destined for China- or Macau-headquartered entities were first established in November 2023 and remain in effect.
The agency said the requirement applies even when those entities are located outside China or Macau.
The clarification follows confusion over a May 2025 announcement by the BIS that it would not enforce certain parts of the Biden-era AI diffusion rule.
The rule was designed to restrict sales of advanced AI chips to strategic rivals while allowing broader access for U.S. allies.
The BIS said the policy change did not remove existing licensing requirements for exports involving Chinese or Macau-based customers, meaning companies must still obtain licenses unless an exemption applies.
The guidance also states that legitimate data center operators can continue to use, maintain, store, or replace advanced AI chips and equipment they already own.
The clarification does not require companies to shut down or remove existing systems.
Nvidia’s sales of advanced AI chips to China remain subject to U.S. export controls.
The Trump administration created a framework in 2025 allowing certain chips, including the H200, to be sold to approved Chinese customers under Commerce Department oversight.
Trump said in a Dec. 8, 2025, post on Truth Social that sales would be permitted subject to a 25 percent fee benefiting the U.S. government and limited to approved Chinese customers.
President Donald Trump (L) shakes hands with Nvidia CEO Jensen Huang as they discuss investing in America, at the White House on April 30, 2025. Jim Watson/AFP via Getty Images
An Nvidia spokesperson told The Epoch Times that the BIS guidance doesn’t impact its business.
It “simply reaffirms that NVIDIA’s current sales and vetting process is correct — licenses are required to ship controlled products to [China] headquartered companies,” the spokesperson said.
The Epoch Times reached out to AMD, another major supplier of AI chips, for comment, but did not receive a response by publication time.
Former U.S. State Department official Chris McGuire, who focuses on technology and national security issues, said in a May 31 post on X that the ambiguity surrounding BIS enforcement may have enabled overseas subsidiaries of Chinese firms to legally acquire advanced U.S. AI chips without export licenses.
“Chinese companies have been buying these chips, very likely at scale,” McGuire wrote in the social media post.
He argued that the lack of clarity about which export controls remained in effect created an opening that may have allowed subsidiaries of Chinese firms operating in countries such as Malaysia to purchase Nvidia’s Blackwell processors.
McGuire said the new BIS guidance appears to close that pathway by making clear that exports to China-headquartered companies outside China still require licenses.
Nvidia CEO Jensen Huang eats a bowl of noodles on a street in Beijing on May 15, 2026. Jiang Panpan via AP/Screenshot via The Epoch Times
He said that BIS has not clarified whether it will enforce due diligence requirements that apply to semiconductor foundries such as Taiwan Semiconductor Manufacturing Co. (TSMC) when assessing whether advanced AI chips could ultimately benefit Chinese companies.
“This is a massive loophole that still needs to be closed,” McGuire said.
The Epoch Times reached out to TSMC for comment but did not receive a response by publication time.
Michael Sobolik, a senior fellow at Hudson Institute specializing in U.S.–China relations, raised enforcement concerns.
“This looks like an apparently MASSIVE loophole at the Department of Commerce,” Sobolik said in a May 31 post on X.
Quoting McGuire’s analysis, he questioned the effectiveness of export controls if they are not consistently enforced.