The Biden administration is considering additional measures to restrict Chinese companies from gaining access to artificial intelligence chips made in the United States through units available overseas, Reuters reported on Oct. 13.

Citing sources familiar with the matter, the report said the U.S. government is looking to address a loophole that gives Chinese companies the unfettered ability to purchase American semiconductor chips from third-party vendors, such as those located in the infamous Huaqiangbei electronics area in Shenzhen, China.

The sources reportedly said that the additional restrictive measures could be implemented this month and will apply restrictions previously carried out to the top American AI chip makers, including Nvidia and AMD, but more broadly to all companies producing similar materials in the market.

The U.S. government has been imposing AI chip controls on China, with continuous attempts to close other loopholes that gave Chinese firms access to such units. In August, Nvidia and AMD were reportedly ordered to restrict shipments of chips to some Middle East countries.

Regulators in the U.S. have since pushed back on those claims, denying blocking AI chip sales to the Arab region.

The U.S.’s initial export controls on its most powerful semiconductor chip technology date back to October 2022. The government has since tightened measures and is still considering taking more steps to further limit the computing power of chips available in the Chinese market.

According to a report by the George Washington University-affiliated International Affairs Review, China’s AI capability aids its military in developing unmanned combat systems.

In response to the Western power, the Chinese Ministry of Commerce announced plans for export controls on metals predominantly used to manufacture semiconductors for AI systems. At the time, the Chinese agency said the controls aimed to protect national security interests, with the export of specific gallium and germanium products requiring a government-issued license.