On Sunday, the U.S. Department of Commerce announced new regulations to prevent the export of advanced AI chips, such as Nvidia's Rubin and Blackwell processors and AMD's MI350x, to Chinese firms located outside of China. This decision aims to close a loophole that had allowed these companies to receive shipments for nearly a year, despite ongoing U.S. efforts to restrict semiconductor access for Chinese entities. The unexpected guidance indicates that the advanced chips may have been exported in large quantities, possibly numbering in the hundreds of thousands, to subsidiaries of Chinese AI firms in countries like Malaysia. The loophole was created when the Commerce Department decided not to enforce the AI Diffusion rule established during the previous administration. While the new regulations will enforce licensing requirements, they do not mandate that data centers cease using or servicing the chips already in operation. Experts, including former State Department official Chris McGuire, have emphasized the significant implications of this loophole, suggesting that it enabled Chinese companies to acquire these critical technologies without proper oversight.