The U.S. banned Nvidia’s best chips from going to China. Now it’s trying to close a crucial loophole

Nvidia’s effective monopoly over the most powerful chips has made U.S. export controls a key tool in Washington’s effort to preserve its advantage over China in the AI race.

But despite U.S. restrictions on exporting the company’s most advanced semiconductors, including GB300s, several Chinese firms have reportedly been able to access the chips’ compute power via data centers in Southeast Asia.

Less than a week after Moonshot AI released a new model in July, White House official Michael Kratsios accused the company of using Nvidia’s GB300 chips via a facility in Thailand.

Moonshot’s Kimi K3 is one of a wave of new Chinese AI models that have made leaps in performance in recent months, as the race for AI supremacy between Washington and Beijing intensifies. DeepSeek and Alibaba have also recently released new AI systems that have scored well on performance benchmarks.

Industry watchers say access to advanced compute via overseas cloud providers is a key factor in Chinese AI models gaining capability. U.S. legislation is being discussed to plug this loophole, but hurdles remain before it can have an impact.

Nvidia’s most advanced AI chips are under export restrictions to China, though some less capable semiconductors are allowed to be shipped to the country.

Cassia King, senior researcher on the Compute Policy team at the Institute for AI Policy and Strategy, told CNBC that Moonshot’s reported access to compute through a…