BIS Delays Cause NVIDIA Export License Holdups Amidst Bureau Turmoil

NVIDIA's AI chip sales to China are delayed due to export license delays caused by chaos at the US Department of Commerce's Bureau of Industry and Security (BIS). BIS is experiencing operational turmoil, with staffing losses, delayed rule updates, and restricted industry communication. The delays impact not only AI chip sales but also other global markets, causing frustration for American companies. BIS defends its actions, emphasizing rule strengthening and enforcement to prioritize national security.

NVIDIA's (NVDA) AI chip sales to China are experiencing significant delays due to operational turmoil at the US Department of Commerce's Bureau of Industry and Security (BIS). The delays are causing frustration for American companies and impacting global markets, including AI chip sales.

The BIS, responsible for approving export licenses for sensitive goods and technology, has been facing staffing losses, delayed rule updates, and restricted industry communication. According to Reuters, thousands of license applications are in limbo, including those for NVIDIA's H20 AI chip [1].

NVIDIA had hoped to start deliveries of its H20 chip to China soon after the government assured it of swift license approval. However, no licenses have been issued yet, and billions of dollars of AI chip orders are at stake. The backlog of license applications is the lengthiest in more than three decades, according to a US official [1].

The turmoil at BIS is alarming both those seeking tougher restrictions on exports to China and companies trying to sell their wares abroad. Meghan Harris, who served on the National Security Council in the first Trump administration and has worked at Commerce, said, "Licensing is how the U.S. does business and competes globally. Delays and unpredictability put us at an unnecessary disadvantage" [1].

The Commerce Department's Bureau of Industry and Security averaged 38 days per export license application in fiscal year 2023, denying 2% of 37,943 applications [1]. Some staff have criticized Jeffrey Kessler, who became BIS undersecretary in March, for micromanaging the bureau and failing to communicate adequately [1].

Frustration is growing within U.S. industry. Sean Stein, president of the US-China Business Council, said, "We’re seeing whole sectors where there is no movement or indication if or when licenses will be issued" [1]. Jim Anzalone, president of Compliance Assurance, a Florida-based trade consultancy, has seen delays in license approvals for sensors, radars, and sonar to Latin America and other parts of the world [1].

The BIS is also delaying regulatory changes. The agency said in May it would rescind and replace a Biden administration rule restricting AI chip exports before it went into effect, but the agency has not done so yet [1]. Other rules, which sources said have been drafted for months, have not been published [1].

Meanwhile, important staff vacancies such as China-based export control officers have not been filled, and high-level career employees have resigned. A retirement party was held this week for Dan Clutch, acting director of the BIS Office of Export Enforcement, the latest experienced staff member to leave [1].

BIS defends its actions, emphasizing rule strengthening and enforcement to prioritize national security. However, the delays and inaction at an agency tasked with promoting overseas trade and safeguarding American technology are causing concern.

References:
[1] https://www.reuters.com/world/us/us-government-turmoil-stalls-thousands-export-approvals-sources-say-2025-08-01/