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In this TheBlaze article, Zoe Jung reports that a quietly released Commerce Department guidance document suggests advanced American AI chips may have reached China-linked entities through a loophole in export controls.
- The article says U.S. export rules were designed to keep America’s most powerful AI chips out of hostile hands, but may have focused too narrowly on where a company is headquartered rather than who ultimately owns it.
- According to the report, Chinese tech firms could potentially establish subsidiaries in countries such as Singapore or Malaysia and use those entities to buy chips that the parent company would otherwise be barred from purchasing.
- The Bureau of Industry and Security reportedly issued guidance clarifying that subsidiaries of companies headquartered in U.S. arms-embargoed nations, including China, still require export licenses to purchase advanced chips.
- The article notes that this requirement had technically existed since November 2023, but the agency acknowledged ongoing questions about whether the rule was still being enforced.
- Jung writes that the Trump administration scrapped the Biden-era AI Diffusion Rule framework in May 2025, calling it too complex and bureaucratic, but that removing it without a replacement may have created an enforcement gap.
- Former State Department official Chris McGuire, who helped develop the earlier chip export framework, warned that Chinese companies had likely been buying advanced chips “at scale” during the loophole window.
- The report says the new guidance does not restore a separate safeguard requiring offshore chip manufacturers to verify the true buyer behind a purchase, which critics say remains a major vulnerability.
- The article contrasts China reportedly passing on Nvidia’s H200 chip deal with the possibility that more powerful Blackwell chips may have flowed through indirect channels.
- Nvidia told Al Jazeera that its sales and vetting process complied with the clarified rules and argued that China already has enough domestic chips for military applications, though TheBlaze says Nvidia did not respond to its own request for comment.
Read the full story:
https://www.theblaze.com/news/americas-most-powerful-ai-superchips-may-be-in-chinas-hands
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