The gap, officials worry, let Chinese companies acquire banned chips through overseas subsidiaries. New guidance is meant to close it, after the chips may already have moved.
The export ban worked on paper and leaked in practice. Trump administration officials are worried that a gap in US rules allowed Chinese companies to legally buy servers fitted with Nvidia’s most advanced AI chips, the Blackwell line, by routing the purchases through subsidiaries outside China.
The controls aimed at Beijing turned out to have a door left open in Singapore and Malaysia, even as Washington has been moving to cut off China’s access to chipmaking equipment through measures like the proposed MATCH Act.
The mechanism was a question of where a company is headquartered versus where it shops. Chinese firms such as Alibaba could, in most countries outside China itself, buy systems carrying banned high-end Nvidia GPUs through overseas subsidiaries, because enforcement had not consistently followed the chips to the parent company behind the buyer.
The result, by the concern officials are now voicing, was that Chinese companies could acquire Blackwell chips and have AI chips fabricated at TSMC, legally and without a licence.
