U.S. extends AI chip ban overseas

The U.S. Commerce Department has moved to shut a gap in its AI chip controls by saying the rules apply to Chinese companies even when they buy through subsidiaries outside mainland China. The guidance, issued by the Bureau of Industry and Security on May 31, says license requirements for advanced AI chips apply to businesses headquartered in China or owned by a Chinese parent, according to Commerce’s notice and Reuters reporting. That change matters because earlier restrictions were often described geographically — focused on shipments into China — while this clarification ties compliance to ownership and control. In practice, that means a Chinese company’s affiliate in places such as Malaysia or elsewhere overseas cannot be treated as outside the scope simply because it sits beyond China’s borders, according to the Reuters account of the guidance. (aljazeera.com) The Bureau of Industry and Security said it issued the clarification after questions about whether pre-existing license requirements were still being enforced after the Trump administration scrapped former President Joe Biden’s Framework for Artificial Intelligence Diffusion before it took effect. BIS answered that question directly: “The answer is yes,” Al Jazeera reported from the notice. (money.usnews.com) The immediate target is the highest-end computing hardware. Reuters said the loophole could have allowed exports of chips such as Nvidia’s most advanced Blackwell processors to subsidiaries of Chinese companies outside China. Nvidia’s top Blackwell GPUs are already barred for export to China itself, Al Jazeera reported. Nvidia said the new notice does not require a change in how it screens customers. “The guidance reaffirms that NVIDIA’s sales and vetting process is correct,” a company spokesperson told Al Jazeera, adding that licenses are required to ship controlled products to companies headquartered in the People’s Republic of China. (aljazeera.com) AMD and Intel did not immediately respond to Al Jazeera requests for comment, and TSMC declined to comment. (money.usnews.com) The policy arrives amid broader U.S. concern over how Chinese buyers obtain advanced chips. Reuters reported in April 2025 that Washington imposed new licensing requirements on exports of Nvidia’s H20 and AMD’s MI308 to China, prompting Nvidia to disclose a $5.5 billion charge. Nvidia said at the time that the restrictions affected its most advanced chip then available for sale in China. (aljazeera.com) Separate reporting this week added to those concerns. Bloomberg reported that at least seven Chinese universities tied to the country’s armed forces and defense industry were seeking access to Nvidia H200 chips through procurement channels, while Reuters previously reported negotiations over H200 license terms for Chinese buyers including ByteDance under Know-Your-Customer conditions set by the Trump administration. (thehindu.com) For suppliers and resellers, the practical effect is a wider compliance burden. Because the rule now follows the Chinese parent company rather than just the shipping destination, exporters have to check not only where a buyer is located but who ultimately owns it, according to the Commerce guidance and Reuters’ description of the move. The next test will be in licensing and enforcement. (bloomberg.com) The Bureau of Industry and Security said the notice was meant to answer industry questions after Biden’s abandoned diffusion framework, and companies including Nvidia will now be judged on whether their customer-screening systems catch Chinese-controlled entities operating overseas. (aljazeera.com)