US Closes Loophole That Allowed Advanced AI Chips to Reach Chinese Firms

How the Loophole Emerged

Those earlier relaxations, implemented in May 2025, had suspended a rule imposed under former President Joe Biden that prohibited shipping advanced semiconductors to countries from which they could reach China. The suspension inadvertently created the very gap the BIS is now addressing.

The chips in question include Nvidia's Rubin and Blackwell processors as well as AMD's MI350x chips, which are considered irreplaceable in the global race to develop artificial intelligence. Nvidia once generated billions of dollars in business in China before trade disputes largely brought that business to a halt.

It remains unclear how many advanced semiconductors have reached China since the restrictions were relaxed. Reuters cited an anonymous industry expert who estimated that the number of chips that may have reached China could be in the hundreds of thousands.

Uncertain Scale and Remaining Gaps

Despite the clarification, data centers currently using such technology do not need to cease operations, the BIS statement noted. However, an industry expert told Reuters that manufacturers like TSMC still do not have to verify for whom their chips are intended, pointing to another potential loophole in the enforcement framework.

The move signals that the Trump administration intends to maintain a hard line on semiconductor export restrictions to China, even as President Donald Trump had recently sought to reduce broader conflicts with Beijing. Nvidia had also recently attempted to regain a foothold in the Chinese market.

The US government has been trying for years to cut off China's supply of advanced semiconductors, viewing control over AI-enabling hardware as a strategic priority. The BIS clarification represents the latest tactical adjustment in that ongoing effort.