The U.S. Department of Commerce’s Bureau of Industry and Security issued a notice on Sunday requiring a license to export advanced AI processors to entities ultimately headquartered in China, effectively blocking sales to Chinese firms operating outside China.
The notice covers Nvidia Corporation (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) chips, which were reportedly supplied to subsidiaries of Chinese companies located abroad for nearly a year despite broader U.S. export restrictions.
The action follows the Biden administration’s decision not to enforce the “AI Diffusion Rule” introduced in May 2025, which had left a loophole for AI chip sales. The Trump administration had previously tightened restrictions but later loosened them, allowing Nvidia to sell its second‑most‑advanced chip to ten approved Chinese entities, though few sales occurred.
China continues to pursue self‑reliance in AI hardware, with domestic firms such as Huawei developing home‑grown chips and AI startup DeepSeek claiming its latest models run on Huawei hardware.
