General-purpose AI software, untrained algorithms, and datasets without military applications are out of scope of the controls.

The rules — administered by the US Department of Commerce’s Bureau of Industry and Security (BIS) — also block the export of semiconductor manufacturing equipment to prohibited countries including Russia, North Korea and China.

Cloud computing loophole

However, the existing rules omit the provision of chips-as-a-service, or cloud computing, creating a potential loophole for Chinese companies to benefit from the chips as long as they remain on US soil.