US Imposes Ban on Sale of Advanced AI Chips to Chinese Companies

The US Department of Commerce issued an emergency directive on Sunday prohibiting subsidiaries of Chinese companies located outside China from exporting AI chips. This move aims to prevent Chinese firms, including those based in countries like Malaysia, from obtaining advanced semiconductors through such affiliate companies, amid concerns that the US restrictions are being circumvented.

An undisclosed report related to this issue was released in Washington, prompting the Department of Commerce’s Bureau of Industry and Security to enforce the new directive. According to a report obtained by Reuters, a ‘loophole’ had opened that allowed the export of advanced chips. While the Trump administration did not fully disclose the volume of chips exported through this channel in the first year it was open, an expert in the chip industry estimated the number could be in the hundreds of thousands.

Under the new directive, Chinese-headquartered companies with subsidiaries operating outside China must obtain export licenses before purchasing advanced chips. A bureau spokesperson noted that this requirement for export authorization has been in effect since 2023, but the directive clarifies and reinforces the rule, emphasizing the ongoing strict export controls to protect US technology. An Nvidia official indicated that the Commerce Department had already clarified the scope of license requirements, suggesting the new directive would not significantly change the existing controls. So far, another major chip maker, AMD, has not responded to requests for comment on the issue.