US takes step to halt Nvidia AI chip shipments to Chinese firms outside China

The United States has moved to close a potential loophole that may have allowed advanced AI chips to be exported to Chinese entities located outside of China. The Department of Commerce issued new guidance Sunday, aiming to prevent sophisticated processors, such as Nvidia's Rubin and Blackwell chips and AMD's MI350x, from reaching Chinese firms operating through subsidiaries in countries like Malaysia.

This unexpected guidance suggests that the most advanced artificial intelligence chips from the U.S. may have been making their way to these Chinese subsidiaries for nearly a year. This occurred despite broader U.S. efforts to restrict Chinese firms' access to semiconductors crucial for developing critical AI capabilities.

The new guidance, posted on the Commerce Department's website, clarifies that license requirements for advanced chips will be enforced for entities headquartered in China, even if they are located outside the country. The exact number of chips exported under the previous, more open policy remains unclear, though one industry source with deep supply-chain knowledge estimated it to be in the hundreds of thousands.

The Commerce Department did not immediately respond to requests for comment on the new directive.