Commerce Department finalizes rule blocking Chinese remote chip access

The US Commerce Department is reportedly finalizing a rule to prevent Chinese AI labs from remotely accessing frontier chips located in data centers in countries like Singapore or Malaysia. Previously, while Chinese companies were banned from importing the most powerful American chips, they could rent them via neoclouds. This move follows scrutiny of Megaspeed, a company involved in the Jensen Huang scandal, which was not placed on the entity list despite executive Alice Wong being a suspected spy. Secretary of Commerce Howard Lutnick is reported to have quashed efforts to list Megaspeed. Democratic senators have sent a letter demanding the preservation of all communications regarding this decision, anticipating a major investigation by the incoming Democratic majority in Congress. The crackdown is expected to disadvantage Chinese AI companies in the short term, potentially forcing them to accelerate domestic chip development by Huawei and others.