U.S. Closes Loophole That Let Nvidia, AMD AI Chips Flow to Overseas Chinese Entities

The U.S. Commerce Department on May 31, 2026, reversed a year-old policy that had allowed exports of advanced AI chips—including Nvidia (NVDA) and AMD (AMD) processors—to Chinese companies’ subsidiaries outside China without a license. The unusual weekend guidance now requires licenses for shipments of Nvidia’s Blackwell and Rubin chips and AMD’s MI350x to any entity headquartered in China, even if located in third countries like Malaysia. The loophole stemmed from the Trump administration’s May 2025 decision not to enforce the Biden-era AI Diffusion rule, which governed global access to such chips. A chip-industry source with supply-chain knowledge estimated hundreds of thousands of chips have been exported under the gap. Technology expert and former State Department official Chris McGuire said Chinese firms “very likely” bought Nvidia Blackwell chips at scale without licenses. The guidance stops short of forcing data centers to halt use or servicing of existing hardware. Shares of Nvidia and AMD face potential headwinds as the clampdown threatens a key sales channel.