In January 2026, the Bureau of Industry and Security (BIS) issued a final rule that changes how the U.S. government reviews export licenses for certain advanced AI semiconductors, such as Nvidia H200 and AMD MI325X equivalents, when they are headed to China or Macau. The previous policy was a presumption of denial, meaning most applications were automatically rejected. Now, those applications receive case-by-case review, effective January 15, 2026. This creates a limited but meaningful pathway for exports while still protecting national security.
The rule applies to chips that fall below specific performance thresholds: Total Processing Performance less than 21,000 and total DRAM bandwidth less than 6,500 GB/s. Companies wanting to export these chips must provide strong certifications, including confirming that the chips are commercially available in the United States, that the export will not reduce domestic supply or divert manufacturing capacity, that the recipient has solid security and know-your-customer procedures, and that independent third-party testing in the U.S. verifies the chip’s performance. This requirement applies ONLY to direct exports from the United States. (Reexports and transfers within China or Macau continue to face a presumption of denial.)
These changes create both opportunities and serious challenges for defense and aerospace contractors, subcontractors, and startups in the space and technology sectors.
Prime contractors and major industry leaders may feel some relief, now finding it easier to pursue controlled collaborations with know and trusted international partners and allies. However, any inaccurate certification could lead to False Claims Act liability, especially when linked to U.S. Department of Defense contracts. Subcontractors and suppliers should prepare for stricter due diligence from prime contractors, which could create delays in the supply chain and frustrate relationships. Small and medium-sized enterprises, as well as startups, may gain better access to global markets for less-sensitive items, particularly in commercial space and AI applications. At the same time, the risk of misclassifying products or allowing diversions remains very high.
At the same time, enforcement efforts in this area continue to be strong. In December 2025, the Department of Justice’s Operation Gatekeeper dismantled a smuggling network that moved more than $160 million worth of Nvidia GPUs to China. Authorities seized over $50 million in assets. The scheme relied on falsified end-user certificates and transshipment through places like Hong Kong, Malaysia, and Singapore. In addition, it is worth noting that this policy shift is closely linked to President Trump’s December 2025 announcement that the U.S. government would receive a 25% cut of revenue from approved sales of these chips to China. The mechanism—implemented through case-by-case licensing and a 25% tariff on chips routed through the U.S. for third-party testing—aims to balance export flexibility with revenue generation for national security priorities. The arrangement, however, remains unsettled and rather hotly debated. Critics argue that it violates the Export Control Reform Act’s prohibition on fees tied to license processing, while supporters contest it is a lawful tariff under national security authorities. Legal and congressional scrutiny remain on the subject matter.
In addition, ITAR rules add another layer of complexity. Misrepresenting technical data as public domain to avoid export licenses can lead to both False Claims Act and export control violations. In this evolving regulatory landscape, early compliance review and expert guidance are the best ways to navigate the new rules safely.
