A bipartisan pair of U.S.
senators on Monday urged President Donald Trump’s administration
to tighten rules on chip contract manufacturers such as Taiwan
Semiconductor Manufacturing Co to prevent them from
making advanced AI chips for overseas subsidiaries of Chinese
companies.
This comes after the Trump administration last week moved to halt a potential loophole that may have led companies to export advanced chips such as those made by Nvidia to subsidiaries of Chinese companies located outside China. That potential loophole arose last year when the Trump administration announced it would
not enforce rules put in place by the previous Biden
administration governing global access to U.S. chips.
The Bureau of Industry and Security (BIS), the arm of the
U.S. Commerce Department that oversees export control laws, has
clarified that sales to Chinese company subsidiaries in third
countries such as Malaysia require a license.
But experts such as former State Department official Chris
McGuire said last week that the guidance still did not address
another potential loophole, under which front companies for
Chinese firms could order custom chips to be made by chip
contract manufacturers such as TSMC.
On Monday, Sen. Jim Banks, an Indiana Republican, and Sen.
Andy Kim, a New Jersey Democrat, sent a letter to BIS chief
Jeffrey Kessler asking the BIS to directly address the issue of
subsidiaries of Chinese firms ordering custom chips.
“Should this gap remain unaddressed, it would substantially
undermine every other restriction the United States has imposed
on the (China’s) access to advanced computing capability,” the
senators wrote. “Export controls that can be circumvented
through fabrication orders placed at the world’s most advanced
foundry offer no meaningful protection to American national
security or to the competitiveness of United States industry.”
The BIS and TSMC did not immediately respond to a request
for comment.
Published on June 9, 2026
