Published on June 1, 2026
For months, Nvidia operated under a system where its top-tier chips could be indirectly purchased through subsidiaries located overseas. This loophole allowed firms in China to circumvent stringent US export regulations, creating a competitive environment in the global AI sector.
Now, the US Commerce Department has introduced new guidance that alters the landscape. Export-licence rules will tie directly to the headquarters of a company, meaning even overseas branches of Chinese firms are affected. This shift effectively shuts down avenues for these companies to acquire Nvidia’s advanced processors.
The move reflects escalating tensions between the US and China over technology and security. Under the revised regulations, any subsidiary of a Chinese entity, regardless of its physical location, faces a stricter review process for obtaining critical chips. As a result, many AI projects in China may face significant delays or scale back innovations.
This guidance could fortify the US position in the semiconductor industry while limiting China’s advancements in AI. However, it may also push Chinese firms to explore alternative sources or develop native technologies, potentially resulting in a more fragmented global tech landscape.
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