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U.S. Clarifies Semiconductor Export Controls Apply to Overseas Subsidiaries of Chinese Companies
The Department of Commerce clarified that licensing rules for advanced AI chips apply to all companies with headquarters or a parent company in China. The move closes a loophole that had allowed shipments to Chinese subsidiaries outside China.
Jun 1, 2:46 AM·1m read1 source
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The United States issued a notice on June 1, 2026, affirming restrictions on shipments of semiconductors to subsidiaries of Chinese companies located outside China. The Department of Commerce guidance, released Sunday, states that licensing requirements for advanced AI chips apply to all businesses with headquarters or a parent company in China.
The Bureau of Industry and Security issued the clarification after questions arose about enforcement of pre-existing license requirements following the overturning of former President Joe Biden’s Framework for Artificial Intelligence Diffusion.
“The answer is yes,” the Bureau of Industry and Security stated in the notice regarding whether it was enforcing those requirements. U.S. allies.
President Donald Trump’s administration scrapped the framework last May, citing “burdensome new regulatory requirements” and harm to Washington’s diplomatic relations. Nvidia stated that the guidance reaffirms its sales and vetting process is correct and that licenses are required to ship controlled products to PRC-headquartered companies.
The company’s top-of-the-line Blackwell GPUs remain banned for export to China.
AMD and Intel did not immediately respond to requests for comment. A spokesperson for Taiwan Semiconductor Manufacturing Company declined to comment. The Bureau of Industry and Security did not respond to inquiries.
Chris McGuire, a former State Department official who worked on technology policy in the Biden administration, said Chinese companies have been buying these chips very likely at scale and that because the Bureau of Industry and Security had not updated export control regulations this was legal.
