US Moves to Block China’s Overseas Units From Obtaining Nvidia Blackwell Chips
Summary
- The US Commerce Department said it would extend advanced AI-chip licensing rules to Chinese companies’ overseas subsidiaries to block indirect purchases of chips including Nvidia Blackwell.
- Chinese companies’ subsidiaries in third countries such as Malaysia are now included in the rules covering cutting-edge AI chips, and the scale of the regulatory gap may have reached hundreds of thousands of units.
- China is also having difficulty securing H200 chips because of its own regulations, and the latest move further narrows Chinese companies’ access to the newest US-made chips.
Forecast Trend Report by Period
Chinese overseas subsidiaries brought under export controls
Move targets Nvidia Blackwell procurement
Malaysia and other third-country routes in focus
Even H200 faces hurdles under China’s own rules
The US is moving to stop Chinese companies from using overseas subsidiaries to obtain advanced AI chips. The step would extend licensing rules beyond mainland China after concerns that cutting-edge chips such as Nvidia’s Blackwell could still reach Chinese buyers through entities in third countries including Malaysia.
US targets China’s offshore workaround
Reuters reported that the Commerce Department said on its website on May 31 that it would extend advanced AI-chip licensing rules to companies outside China. The move is intended to prevent the latest AI chips from US companies, including Nvidia Blackwell, from reaching Chinese firms through their overseas subsidiaries.
Exports to China of advanced US-made AI chips such as Nvidia’s Blackwell are already banned. But there had been a regulatory gap that allowed subsidiaries of Chinese companies in places such as Malaysia to obtain those chips.
The latest Commerce Department action is designed to close that route. The licensing rules will cover not only companies in mainland China, but also overseas subsidiaries established by Chinese firms.
Reuters said the department had indicated it would not enforce AI rules announced in May 2025, in the final stretch of Joe Biden’s administration, creating a regulatory gap for about a year.
It was also unusual for the Commerce Department to release the guidance over a weekend, as such announcements are typically made on weekdays. How many advanced AI chips may have reached Chinese companies through the loophole has not been confirmed. A US industry official told Reuters the figure could be in the hundreds of thousands.
Chris McGuire, a former State Department official, called it “a huge problem” in a social media post. He wrote that the loophole allowed overseas subsidiaries of Chinese companies to obtain Nvidia Blackwell chips without approval and said they had probably purchased them in large volumes.
H200 also difficult for China
US President Donald Trump in December 2025 partially allowed exports of Nvidia’s advanced chips to China. The chips covered were the H200, which uses an architecture one generation behind Blackwell.
Chinese companies are also finding it difficult to buy H200 chips. China’s own regulations have limited corporate purchases.
The US has tightened export controls over concerns that advanced AI chips could be used to support China’s artificial intelligence development and strengthen its military capabilities. The latest move further narrows the channels Chinese companies have used to secure the newest US-made chips.
Hong Min-seong, Hankyung.com reporter mshong@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
