The Commerce Department’s Bureau of Industry and Security issued guidance on 31 May clarifying that licence requirements for advanced computing items apply to companies headquartered in China and Macau even when purchases are made through subsidiaries or affiliates based elsewhere. The notice covers advanced AI processors, including Nvidia’s Blackwell-class chips, and is aimed at transactions routed through jurisdictions such as Malaysia and Singapore, where data centre investment and chip imports have risen sharply.
The move follows internal debate in Washington over whether policy decisions made in May 2025 left a regulatory opening after the administration moved away from the Biden-era AI diffusion rule. That framework would have placed broader licensing conditions on advanced AI chip exports across many destinations. Once it was shelved, officials began reassessing whether Chinese-headquartered firms could lawfully obtain restricted chips abroad if the buyer was not physically located in China.
At least some officials now believe the answer may have been yes until the new guidance was issued, although it remains unclear whether Nvidia Blackwell sales to Chinese companies through overseas entities actually took place. The uncertainty has sharpened scrutiny of a policy area central to the US-China technology rivalry, where enforcement often depends on corporate due diligence, end-user checks and the ability to track complex ownership structures.
Nvidia has said it complies with export controls and maintains systems to prevent unauthorised sales. The company remains the dominant supplier of high-end AI accelerators used to train and run frontier models, making its products a focal point of Washington’s effort to preserve US advantages in computing power. Blackwell processors, including GB200 systems, are designed for large-scale AI data centres and are substantially more powerful than earlier chips already restricted for China-bound sales.
The latest guidance does not amount to a new formal rule but signals how the export control agency intends to enforce existing requirements. Companies handling advanced computing chips are now expected to treat headquarters and ownership links as decisive factors, not merely the geographic location of the purchasing subsidiary. That shift is intended to prevent Chinese technology groups from using foreign-registered units to access chips that would be blocked if ordered from China.
The issue has drawn criticism from lawmakers who argue that any delay in closing the gap may have weakened export controls designed to limit China’s military and surveillance capabilities. The concern is that advanced AI processors can support weapons research, cyber operations, intelligence analysis and high-performance simulation, even when acquired through commercial channels.
The controversy also exposes tensions inside Trump’s technology strategy. The administration has sought to use chip controls as leverage in broader negotiations with Beijing while also responding to pressure from Nvidia and other semiconductor companies that warn excessive restrictions could accelerate China’s domestic chip development and reduce US firms’ global market share. Nvidia chief executive Jensen Huang has argued that denying China access to US chips risks pushing Chinese developers towards local alternatives.
Malaysia and Singapore have become increasingly important in this debate because of their roles in electronics supply chains, cloud infrastructure and regional data centre expansion. US officials have grown concerned that AI servers assembled or deployed in third countries could give Chinese firms effective access to restricted computing power without chips ever crossing directly into China.
The guidance leaves unresolved questions about cloud access and already deployed data centres. A Chinese company could still seek computing services from facilities outside China unless separate rules restrict who may use the processing capacity. Enforcement agencies also face the challenge of identifying beneficial ownership and control when corporate structures involve multiple holding companies, joint ventures or leasing arrangements.
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