China's ongoing ability to access advanced AI chips from the likes of NVIDIA and AMD has remained a hard-to-crack conundrum in Washington for quite some time now.
Even so, the Trump Administration now appears to be tightening the proverbial screws on these advanced chips by chopping off a major loophole that has allowed Chinese companies to circumvent US-led export controls.
The Trump administration is looking to ban the foreign subsidiaries of Chinese companies from accessing AI chips from the likes of NVIDIA and AMD
Back in May 2025, the Trump administration created a loophole of sorts for Chinese companies by declaring that it would not enforce the Biden-era AI Diffusion rules. Instead, the administration had declared at the time that it would specifically work to thwart the global penetration of Huawei's Ascend AI chips, and prevent US AI chips, especially ones from NVIDIA, from being used to train Chinese AI models.
Those broad goals, however, then opened a loophole for Chinese companies with foreign subsidiaries, enabling those subsidiaries to buy advanced NVIDIA GPUs to train their parent companies' AI models.
According to a chip industry source cited by Reuters, as many as hundreds of thousands of advanced AI chips from NVIDIA and AMD might have reached such Chinese subsidiaries over the past year.
Now, however, as per an update posted on the US Commerce Department's website, the US will start enforcing licensing requirements on advanced AI chips, especially for entities that are headquartered in China but physically located elsewhere.
Of course, the Trump administration was apparently looking to thwart the China-bound flow of AI chips and GPUs from front companies located in Thailand and Malaysia as early as July 2025. However, no formal advisory had emerged from those nascent efforts at the time.
This comes as federal prosecutors recently charged the co-founder of Super Micro Computer and two of his associates for perpetrating a scheme that diverted around $2.5 billion worth of NVIDIA GPUs to China by using a network of front companies to place the initial orders, and then relying on stealth packaging and shipment for China-bound deliveries.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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