U.S. Commerce Department Blocks Chinese Remote Access to AI Chips

The United States Department of Commerce is finalizing a rule to block Chinese artificial intelligence companies from remotely accessing advanced AI chips through data centers in other countries. The measure expands semiconductor controls from the United States Bureau of Industry and Security to seven additional nations, including Malaysia, Singapore, and Thailand. The rule aims to stop firms such as Tencent, Alibaba, and Bytedance from using Nvidia chips to train AI models via remote access or smuggling.

This initiative follows pressure from President Donald Trump for tighter export controls, despite opposition from Commerce Secretary Howard Lutnick. The crackdown coincides with the proposed Remote Access Security Act (RASA), which would grant the Commerce Department authority to regulate cloud-based access to restricted technology. These developments follow a scandal involving Nvidia CEO Jensen Huang and Alice S. Huang, a former executive at the Singapore-based cloud company Megaspeed. U.S. authorities concluded Alice Huang was a Chinese intelligence asset, a claim China denies.

In response to the looming restrictions, Chinese AI companies are rushing to rent Nvidia-powered computing capacity at overseas data centers. This surge in demand has also increased grey-market activity as traders stockpile restricted processors. Simultaneously, Yih-shyan Wally Liaw, co-founder of Super Micro Computer, was charged with conspiring to divert Nvidia-powered servers to China.