The U.S. Commerce Department's Bureau of Industry and Security is finalizing an expansion of semiconductor export controls designed to block Chinese AI companies from using U.S.-made advanced AI chips through data centers in third countries, according to a report by Leo Schwartz in the Information1,2.
The update would prevent Chinese AI firms from remotely accessing advanced AI computing resources and curb chip smuggling into China via overseas data centers. The new rules could be announced as early as this month, the Information reported.
Seven countries added to restricted list
The rule targets seven additional countries: Singapore, Malaysia, Thailand, Indonesia, Brazil, Norway, and South Africa. Once in effect, those countries will need Commerce Department approval to import Nvidia Blackwell-class and more advanced AI chips. Recipients must report who will receive the chips and how they will be used, and they will face ongoing oversight.
Data centers operated by U.S. companies in those countries will be exempt from licensing requirements if they meet certain conditions. Rather than permitting remote access from U.S. arms-embargoed countries such as China and Russia, operators must report customers' countries and the scale of computing. The United States already requires Commerce approval for advanced AI chip imports in some countries, including Saudi Arabia and Vietnam.
ANALYSIS The rule, as described, targets a workaround in which Chinese companies could train AI models on advanced semiconductors subject to U.S. export bans by routing workloads through data centers in the newly restricted countries.
The finalization comes amid a broader upheaval in U.S. chip-control policy. Chinese AI companies have been moving to rent Nvidia-powered computing capacity at data centers outside China[1]. Separately, the Commerce Department has faced sharp criticism in Congress after reports that it halted its probe into Megaspeed International following Nvidia's involvement[2]. Lawmakers are also working to fold three bills strengthening AI semiconductor export controls into the National Defense Authorization Act.
ANALYSIS The rule, if enacted as described, would represent the most significant expansion of the geographic scope of U.S. AI chip controls since the existing framework began requiring Commerce approval for countries such as Saudi Arabia and Vietnam.