# The Commerce Department’s new guidance, published on its website, indicates that subsidiaries of Chinese AI firms in countries such as Malaysia have been receiving these advanced chips for almost a year.

*semiconductor · news · 2026-05-31 · Benzinga*

## Key points

- The Commerce Department revealed Chinese AI subsidiaries have received advanced chips via countries like Malaysia.
- New guidance will require export licenses for advanced chips to Chinese-headquartered entities, regardless of location.
- A loophole allowed Chinese firms to acquire Nvidia Blackwell chips abroad without a license for nearly a year.
- The guidance does not require data centers to stop using advanced chips already sent to Chinese entities.
- Nvidia's FY2026 compute revenue from China exceeded 20%, largely through intermediaries despite export controls.

What Does The Guidance Say? The Commerce Department’s new guidance, published on its website, indicates that subsidiaries of Chinese AI firms in countries such as Malaysia have been receiving these advanced chips for almost a year. This development comes despite ongoing U.S. measures to limit China’s access to semiconductors vital for AI advancements. The department now intends to impose license requirements for advanced chips on entities headquartered in China, regardless of their location. The loophole emerged when the Commerce Department opted not to enforce the AI Diffusion rule in May 2025, a decision made during the final days of the Biden administration. Expert Explains Significance Of New Guidance Council on Foreign Relations' Senior Fellow for China, Chris McGuire, pointed out in a post on X that this oversight enabled Chinese companies to acquire Nvidia Blackwell chips without a license. However, the new guidance does not mandate data centers to cease using these chips or servicing related computing equipment. "This clarification does make clear that Blackwell shipments to China-headquartered companies outside of China are now illegal again—which is good, although obviously we have to see how many shipments have already gone to assess how much damage was done," he said. Huang Emphasizes China's Significance As A Market The U.S. government’s decision to close this loophole is part of a broader strategy to curb China’s access to advanced technology. Nvidia CEO Jensen Huang recently emphasized China’s significance as a market, underscoring the complex dynamics at play. Despite export controls, Nvidia’s operations in China have remained substantial, with reports suggesting that over 20% of its fiscal year 2026 compute revenue was still derived from China through intermediaries. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock

**Companies:** Nvidia
**Countries:** China, Malaysia, United States

[Read the full story on Benzinga](https://www.benzinga.com/markets/tech/26/05/52894631/us-closes-loophole-allowed-nvidia-amd-ai-chip-shipments-chinese-firms-overseas)

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