U.S. Blocks Chinese Firms from Purchasing AI Chips via Foreign Subsidiaries

The U.S. Department of Commerce has moved to block Chinese companies from acquiring advanced artificial intelligence (AI) chips through their foreign subsidiaries. This action aims to prevent circumvention of restrictions via third-country entities, such as those in Malaysia. The focus of U.S. semiconductor regulations is expanding from mainland China to include overseas bypass routes.
On May 31, Reuters reported that the U.S. Department of Commerce posted guidelines on its website stating that export licensing requirements for advanced AI chips will now apply to foreign subsidiaries of companies based in China. This includes cutting-edge products like NVIDIA's Rubin-Blackwell processors and AMD's MI350x.
The new measure is designed to close loopholes that allow Chinese AI firms to import high-performance semiconductors from the U.S. through third-country subsidiaries. According to Reuters, these companies may have sourced U.S. products from regions like Malaysia. An industry insider familiar with supply chains estimated that hundreds of thousands of units could have been exported in this manner over the past year.
Under the new guidelines, companies headquartered in China must obtain U.S. government approval when importing advanced semiconductors through their foreign subsidiaries. However, the regulations do not require immediate cessation of use or maintenance for existing data center equipment. Instead, the focus is on preventing additional exports and new acquisitions.

* This article has been translated by AI.

AJP