The US Department of Commerce closed the loophole that had allowed advanced AI chips from NVDA and AMD to be exported to Chinese firms operating outside of China. The loophole emerged when the Commerce Department did not enforce the AI Diffusion rule in May 2025, enabling Chinese companies to acquire chips like NVDA Blackwell without licenses for nearly a year. The new guidance requires licenses for advanced chips going to entities headquartered in China regardless of operating location - re-exposing the more-than-20% of NVDA fiscal-2026 compute revenue that had flowed through overseas intermediaries, and partially reversing the May 14 H200 export-approval loosening.