US says ban on AI chip shipments applies to Chinese firms outside China

The United States has issued a notice affirming its restrictions on shipments of semiconductors to subsidiaries of Chinese companies located outside China amid concerns about loopholes in Washington’s export control regime.

The Department of Commerce said in the guidance issued on Sunday that its licensing requirements for the export of advanced AI chips applied to all businesses with headquarters or a parent company in China.

The Bureau of Industry and Security (BIS), which falls under the Commerce Department, said it issued the clarification in response to questions about whether it was enforcing preexisting licence requirements after it overturned former President Joe Biden’s Framework for Artificial Intelligence Diffusion.

Unveiled in the final days of the Biden administration, the framework proposed the implementation of a globe-spanning licensing regime to control access to AI chips, including export caps for all but the closest US allies.

The framework drew backlash from tech firms, including Nvidia, the world’s most valuable chip company, which cast the proposal as a threat to innovation and cross-border collaboration.

President Donald Trump’s administration scrapped the framework last May, ahead of its implementation, citing the “burdensome new regulatory requirements” and the harm it would do to Washington’s diplomatic relations with other countries.

Chip giant Nvidia, whose top-of-the-line Blackwell GPUs are banned for export to China, said it had already been operating in keeping with the clarified rules.

“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,” a Nvidia spokesperson told Al Jazeera, using the acronym for the People’s Republic of China.