US AI Chip Export Ban Now Covers Chinese Firms Globally

The United States has officially confirmed that its export ban on advanced AI chips extends to Chinese firms operating outside China. The Department of Commerce released this guidance on Sunday, addressing urgent concerns regarding potential loopholes in the nation's export control system.

The Bureau of Industry and Security, a division within the Commerce Department, clarified that existing licensing rules apply to any business with a headquarters or parent company in China. This directive responds to specific questions about enforcement following the overturning of former President Joe Biden's artificial intelligence framework.

"The answer is yes," the BIS stated clearly in its notice. This affirmation confirms that restrictions remain active despite recent administrative changes.

The previous framework, unveiled near the end of the Biden administration, aimed to create a global licensing regime limiting access to AI chips for all nations except close US allies. However, the plan faced immediate backlash from major technology firms. Nvidia, the world's most valuable chip company, criticized the proposal as a threat to innovation and international collaboration.

President Donald Trump's administration scrapped the framework last May before it could take effect. Officials cited the burdensome regulatory requirements and potential damage to diplomatic relations as reasons for the cancellation.

Reuters first reported on this updated guidance. Chip giant Nvidia confirmed it has already been operating in full compliance with these clarified rules.

"The guidance reaffirms that NVIDIA's sales and vetting process is correct – consistent with our existing approach, licences are required to ship controlled products to PRC-headquartered companies," an Nvidia spokesperson told Al Jazeera.

Competitors AMD and Intel did not immediately respond to requests for comment. A spokesperson for Taiwan Semiconductor Manufacturing Company, which produces chips for clients like Nvidia, also declined to comment. The BIS did not respond to further inquiries.

Chris McGuire, a former State Department official who worked on technology policy under the Biden administration, warned that the Trump administration may be creating a significant loophole. He accused officials of allowing Chinese companies to purchase export-controlled chips.

"Chinese companies have been buying these chips, very likely at scale," McGuire said, highlighting the ongoing risks to US technology security.

The United States has tightened restrictions on high-end technology exports to China as Washington and Beijing battle for artificial intelligence dominance," a report notes.

In December, President Trump authorized Nvidia to sell its H200 chip to China, representing a significant loosening of previous export controls.

Although the H200 is not Nvidia's most advanced processor, it delivers roughly six times the power of the H20, the most advanced model previously permitted for export.

"Because BIS has not updated export control regulations to clearly state what it IS enforcing, all of this was legal," McGuire stated in a post on X.

"This clarification does make clear that Blackwell shipments to China-headquartered companies outside of China are now illegal again – which is good, although obviously we have to see how many shipments have already gone to assess how much damage was done," McGuire added.

"BIS's statement acknowledges these shipments have been happening when it says companies who bought chips under this loophole don't have to stop using them," McGuire explained.