One of Congress’s most prominent Republican China hawks is pressing the Trump administration to preserve a Biden-era safeguard against indirect semiconductor diversion just as Washington has begun allowing some powerful American AI chips back into China.
Rep. John Moolenaar, the Republican chair of the House Select Committee on China, urged the Commerce Department to enforce a January 2025 rule designed to make semiconductor foundries scrutinize customers that could be acting as intermediaries for restricted Chinese companies, according to a letter first reported by Reuters.
The dispute puts a narrower issue underneath Washington’s larger fight over Nvidia exports to China.
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The Bureau of Industry and Security introduced the foundry requirements in January 2025 after chips designed by Chinese semiconductor company Sophgo and manufactured by TSMC were discovered in Huawei AI processors.
The Commerce Department said at the time that the regulations were intended to strengthen due diligence at semiconductor foundries and packaging companies and prevent advanced computing chips from being diverted to restricted Chinese entities.
The rule imposed broader licensing requirements on foundries and packaging companies producing certain advanced chips unless specified safeguards applied, including transactions involving approved chip designers or trusted packaging companies. It also tightened reporting for transactions involving newer customers deemed at greater risk of diversion.
Commerce simultaneously added 16 entities to its Entity List, including Sophgo Technologies. Sophgo has previously denied having a direct or indirect business relationship with Huawei.
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According to Reuters, Moolenaar told Commerce Undersecretary for Industry and Security Jeffrey Kessler in his August 6 letter that the foundry measure had been designed “to close the loophole that Huawei and Sophgo exploited.” He warned that uncertainty among major foundries about whether the requirements still apply could “dramatically increase the risk of another SophGo-like export control failure.”
The enforcement question stems from a different regulatory decision made months after Trump returned to office. In May 2025, Commerce announced that it would rescind the Biden administration’s broader AI Diffusion Rule, which had attempted to regulate global access to advanced US computing chips.
The warning arrives as the Trump administration has already moved in the opposite direction on another major China semiconductor restriction.
Commerce in January 2026 changed its licensing policy to allow Nvidia H200 chips, AMD MI325X chips, and similar processors to be considered for export to China on a case-by-case basis.
The H200 is among Nvidia’s most powerful AI processors. Kessler told lawmakers on July 14 that shipments to China had started, although only “very few” chips had been exported at that point, Reuters reported.
That policy has faced opposition from both parties. Republican lawmakers and former Trump officials raised concerns when the H200 rules were announced in January, while Democratic lawmakers have accused the administration of weakening safeguards around advanced AI technology.
Moolenaar’s intervention is part of a separate but related line of congressional pressure. In June, Republican Sen. Jim Banks and Democratic Sen. Andy Kim called on BIS to tighten protections against Chinese companies obtaining custom advanced chips through overseas subsidiaries and contract foundries. Their letter argued that controls on direct exports would be undermined if Chinese entities could instead place fabrication orders with the world’s leading chipmakers.
Republican Rep. Bill Huizenga also confronted Kessler at a July hearing over Commerce guidance concerning advanced Nvidia Blackwell chips that may have reached Chinese companies through smuggling or other channels.
