Commerce Readies Rule to Block China's Remote AI Chip Access

The Commerce Department is finalizing a rule that would block Chinese AI companies from renting Nvidia GPU capacity through data centers in third countries, The Information reported. Officials plan to announce the restrictions this month.

The gap being closed is that US export controls cover the physical chip but not remote access to it. "ByteDance, Alibaba, and Tencent have all faced accusations of accessing NVIDIA hardware through data centers in Thailand, Malaysia, Japan, and other locations," and the draft extends existing semiconductor controls to seven additional countries, with Malaysia, Singapore and Thailand explicitly in scope.

The legal underpinning is thinner than the policy. An attorney at Baker McKenzie told The Information that "the Commerce Department lacks statutory authority under current law to regulate remote computing access." Congress has a cleaner vehicle: the House passed the Remote Access Security Act in January 369 to 22, giving the Bureau of Industry and Security "explicit authority over remote access to export-controlled items." The Senate has not moved it.

The loophole is also partly of this administration's making. The Biden-era Foundry Due Diligence Rule would have required cloud providers and data-center operators to verify who their end users actually are before provisioning advanced AI compute. The Trump administration "inherited that rule, declined to enforce it, and publicly said it would not do so." The remote-access draft now tries to recover similar ground through an export-control mechanism whose authority is already contested.

It lands in the same week as our reporting on Chinese firms racing to lock in offshore Nvidia capacity and Nvidia dropping Singapore from its revenue disclosures.