The Bureau of Industry and Security, the Commerce Department division that polices chip export controls, has begun reviewing how Chinese AI firms reach Nvidia hardware overseas, Bloomberg has reported. The focus is not smuggling but a lawful practice: Chinese companies renting computing power by the hour in data centres in third countries, such as Thailand and Malaysia, rather than importing the chips themselves.
Two lists, one loophole
The review builds two lists. One names countries running black markets that move restricted Nvidia chips physically into China, which sits squarely within enforcement's remit. The other names countries where Chinese firms tap the same chips remotely. That second list is unusual, because remote access is not, at present, illegal.
The legal foundation is uncertain. BIS built its powers around the movement of physical goods, so it is unclear whether it can police cloud-computing arrangements at all. The House has passed bipartisan legislation to grant that authority. The Senate has not acted. Even if it does, Nvidia and its peers are certain to fight any limit on overseas data-centre access.
Why the review started now
The immediate trigger was a run of strong Chinese models. In July 2026, Moonshot AI released Kimi K3, which scored nearly as high on benchmarks as the newest systems from Anthropic and OpenAI. A top White House official then accused Moonshot of illegally obtaining Nvidia's best hardware and of reaching those same chips remotely through an unnamed party in Thailand. No public evidence has been produced for the accusation, and Bloomberg reported that the official's post was not coordinated with Commerce. A few days later, the BIS enforcement team launched its review.
The backdrop is a position Trump set in 2025, when he said sales of Nvidia's advanced Blackwell chips to China were off the table. Kimi K3 demonstrated that Chinese firms can still reach those processors through completely legal means.
Contradictions in Washington
The administration's stance is hard to read. Some officials have long pushed to close the remote-access loophole. Yet Commerce shelved its own draft rules, including one that would have curbed sales to Malaysia and Thailand over diversion fears. Trump also cleared exports to China of H200 chips, the same model his officials say smugglers are moving.
Nvidia has argued against the controls, saying they are the reason it "forfeited the world's second-largest commercial market to foreign competitors", and warning that "America cannot afford to lose all of Asia next". Chinese cloud demand is a big driver of Southeast Asia's data-centre boom, and the money at stake is real.
Arrangements built to resist tracing
The structures under review resist tracing by design. Buyers rarely name their Chinese clients, and those clients keep their distance even though the rules permit the setup. According to documents Bloomberg reviewed, Alibaba reaches Nvidia chips in Malaysia through Megaspeed, a Singaporean firm under US investigation for possible diversion. The two do not deal directly: the arrangement runs through a Singaporean shell controlled by a Cayman Islands entity that Alibaba ultimately owns. Both companies declined to comment or did not respond. The chips stay where they are. Only the workloads cross the border. Closing the gap may take a new law, not a new list.
What is established and what is claimed
Established: the BIS enforcement arm has opened a review of overseas access to Nvidia hardware and is compiling two lists, one covering physical smuggling routes and one covering remote access, which remains lawful. The House has passed legislation extending BIS authority to cloud computing, but the Senate has not acted. Commerce shelved draft rules on Malaysia and Thailand, and H200 exports to China were cleared. Kimi K3 was released in July 2026 and benchmarked near leading US systems.
Merely claimed: that Moonshot illegally obtained Nvidia hardware or reached it through a Thai intermediary, an accusation for which no public evidence has been produced. The diversion suspicions around Megaspeed remain under investigation and unproven. The details of Alibaba's arrangement come from documents reviewed by Bloomberg, not from any official finding, and the companies involved declined to comment. Whether BIS can lawfully restrict remote access without new legislation is unresolved.
Sources
- The US is mapping how China rents the Nvidia chips it cannot buy · thenextweb.com