For roughly a year, Chinese companies bypassed US chip export controls with a simple workaround: set up a subsidiary in Malaysia or Singapore, buy the chips there, and avoid licensing requirements. The US Department of Commerce has now closed that loophole.
On May 31, the Bureau of Industry and Security issued new guidance requiring export licenses for shipments of advanced computing chips to any entity headquartered in China, regardless of where the purchasing subsidiary is located. The ruling specifically targets Nvidia's Blackwell and Rubin processors, as well as AMD's MI350x chips.
The new guidance shifts the compliance question from "where is the chip being shipped?" to "who ultimately controls the entity receiving it?" If the answer is a Chinese-headquartered company, a license is now required.
Nvidia confirmed the guidance does not alter its pre-existing licensing obligations. The move changes who can buy chips without a license, but does not affect chips already deployed in data centers.
For investors, closing the export loophole could reduce the total addressable market for Nvidia and AMD in the near term, though both companies have already been pricing in export restrictions for years.