U.S. Closes Loophole, Bans Chinese Overseas Units from Buying Nvidia (NVDA) Blackwell, AMD (AMD) AI Chips

The U.S. Commerce Department issued new guidance on May 31, 2026, requiring licenses for exports of advanced AI chips to entities headquartered in China, regardless of their geographic location. The move shuts a year-long loophole that allowed Chinese firms’ overseas subsidiaries to acquire Nvidia’s (NASDAQ: NVDA) Rubin and Blackwell processors and Advanced Micro Devices’ (NASDAQ: AMD) MI350x chips without restrictions. The loophole originated when the Trump administration chose not to enforce the Biden-era AI Diffusion Rule. A chip-industry source estimated that hundreds of thousands of units may have been exported to locations such as Malaysia during this period. Former State Department official Chris McGuire described the gap as “a huge problem,” saying Chinese companies likely purchased the chips at scale. The new rule does not require data centers to discontinue use of previously acquired chips or halt maintenance services. The policy tightens controls on China’s access to cutting-edge semiconductor technology.