Nvidia stock faces risk as US closes China AI chip loophole

The US Department of Commerce just plugged a hole in its semiconductor export controls that was roughly the size of a shipping container full of advanced AI chips. Updated guidance issued on May 31 now requires export licenses for advanced computing items sold to entities headquartered in China, even when those entities operate through subsidiaries in countries like Malaysia and Singapore. The loophole, which reportedly allowed hundreds of thousands of Nvidia’s Blackwell and Rubin processors to reach Chinese-controlled operations through indirect channels, had been an open secret in the chip industry. What the new rules actually change Previously, Chinese companies could set up shop in friendly third countries and purchase advanced Nvidia chips without triggering the export license requirements that would apply to a direct sale to China. The Commerce Department’s updated guidance targets entities headquartered in Country Group D:5 (which includes China) or Macau, regardless of where the actual purchasing subsidiary sits. The restrictions have been evolving since 2022, with various policy adjustments along the way. A December 2025 allowance permitted limited exports of the H200 vari...