The United States Department of Commerce issued formal guidance on Sunday confirming that federal restrictions on high-end artificial intelligence chip shipments apply to all subsidiaries of Chinese companies, regardless of their global location. The Bureau of Industry and Security (BIS) released the notice to address industry confusion regarding the enforcement of export controls following the Trump administration’s decision to overturn the Biden-era Framework for Artificial Intelligence Diffusion.
The clarification ensures that firms headquartered in the People’s Republic of China cannot circumvent US export caps by sourcing advanced semiconductors through offshore branches. The BIS confirmed the policy in response to direct inquiries about whether preexisting license requirements remained in effect following the removal of the broader framework.
Former State Department official Chris McGuire, who worked on technology policy during the Biden administration, noted that the previous lack of clarity had created a functional loophole. "Chinese companies have been buying these chips, very likely at scale. And because BIS has not updated export control regulations to clearly state what it IS enforcing, all of this was legal," McGuire stated.
While the new guidance re-establishes that shipments to Chinese-headquartered firms are restricted, the government has not mandated the seizure of chips already delivered under the period of regulatory ambiguity. The BIS statement acknowledged that companies currently in possession of chips acquired through this loophole are not required to cease using them.
Chip manufacturer Nvidia, which produces high-end Blackwell GPUs currently under export restrictions, stated it has been operating in compliance with these rules throughout the transition. "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 said.
The Biden administration’s original framework had proposed a globe-spanning licensing regime to control access to AI chips, including export caps for all but the closest US allies. That proposal faced significant backlash from major technology firms, including Nvidia, which argued the requirements threatened innovation and cross-border collaboration. President Donald Trump’s administration ultimately scrapped the framework last May, citing the "burdensome new regulatory requirements" and the potential for harm to Washington’s diplomatic relations with international partners.
