China may have control over America’s most advanced AI superchips.

Concerns About U.S. AI Chip Export Control System

The United States has developed an extensive export control system aimed at preventing its most advanced AI chips from falling into the hands of adversaries. However, there are concerns that this system may have vulnerabilities that could potentially allow countries like China to bypass restrictions.

Current U.S. chip export regulations focus on the headquarters of a company rather than its ultimate ownership. Consequently, it’s possible for Chinese tech firms to establish subsidiaries in places like Singapore or Malaysia, which could then acquire chips that their parent companies aren’t allowed to purchase.

Recently, the Department of Commerce’s Bureau of Industry and Security issued new guidance stating that subsidiaries of firms based in nations under U.S. arms embargoes, including China, will still require export licenses to obtain advanced chips, no matter where the subsidiary is located.

Although this requirement was slated to take effect in November 2023, the Bureau acknowledged it received inquiries regarding its current status.

In May 2025, the Bureau rolled back stricter AI export rules established during the Biden administration, which had been criticized as “overly complex and bureaucratic,” potentially hampering U.S. innovation and straining diplomatic ties with several allies. However, without introducing a new framework, the rules that dictate who can purchase these chips effectively remain unenforced, and any chips obtained during this period do not need to be returned.

Chris McGuire, a former State Department official involved in creating the U.S. semiconductor export policy under Biden, expressed concerns on social media, indicating that Chinese companies are likely purchasing these chips on a large scale.

While the new guidance stipulates that subsidiaries connected to countries under U.S. arms embargoes must secure export licenses, it fails to restore additional safeguards. There’s still a responsibility for offshore chip manufacturers to verify who is behind the purchases, leaving unresolved weaknesses as highlighted by McGuire.

A deal struck by former President Trump in December 2025 allows China to purchase the H200 chip from Nvidia, albeit with the stipulation that Nvidia will refund the U.S. government 25% of its sales. Trump claimed that Chinese President Xi Jinping responded positively to this arrangement, although it appears that China ultimately chose not to approve the deal.

Despite this, China received a limited version of the H200 chip, and some analysts warn that Nvidia’s Blackwell chips could enable the next generation of autonomous weaponry, raising alarms about potential misuse.

Trump made it clear during a flight aboard Air Force One that the new Blackwell chip was significantly ahead of its competitors, reiterating that the U.S. would not share it with anyone outside the country.

In response to concerns, Nvidia claimed it follows established protocols in its sales processes and contended that China has sufficient domestic chip production for military needs. Yet, reports indicate that China remains actively interested in acquiring Nvidia chips.