AI Chips, Sanctions, and Compliance

As artificial intelligence (AI) and its uses expand, so do export controls surrounding these advanced technologies. Why? Most people assume that AI can be used to complete menial tasks at work, brainstorm new ideas, or generate humorous images of their friends – but professional militaries have begun utilizing it as well; as the world changes, so do the supply chains and technologies supporting warfare.

AI integration in militaries around the globe takes many forms. In the United States, U.S. military leaders use AI to create battle plans, operations orders, and other various tasks. In Russia, AI chips have been integrated into electronics for missiles and drones. In early August 2026, the Defence Intelligence of the Ministry of Defence of Ukraine (GUR) published details on their War-Sanctions website showing that an NVIDIA Jetson Orin chip was recovered from an S-71M “Monochrome” cruise missile. The issue? NVIDIA is a U.S.-based company – current export controls and sanctions forbid U.S. companies from exporting specific advanced AI chips to countries like Russia, Iran, or North Korea.

Of course, this does not mean that NVIDIA itself violated export sanctions regulations. Russian military units have become cunning in their attempts to source regulated American goods. In January 2026, it was reported that roughly 80% of Russian communications equipment utilized Ubiquiti networking products. These regulated items are often sourced through various third-party distributors who may not be aware of the risks associated with exporting technology.

In May 2025, the Trump administration called for a rollback of Biden-era AI export control rules and has slightly shifted the regulatory requirements. The Biden-era ruling was replaced with a case-by-case review system for specific chips, with certain countries still working under a presumption of denial for export licensing (Russia, Iran, etc.)

The new BIS rule from January 2026 requires exporters to certify that foreign customers have adequate security procedures, and that exporter demonstrates there is not a shortage of domestic supply of chips. There is also a requirement to confirm that exports are not prohibited by end use controls, including remote access regulations. This update to the rule allows for some advanced chips (like the NVIDIA H200 or AMD MI325X) to export to China and Macau if the conditions are met.

So, how does one make sure they are not violating export controls? Businesses should consider the following best practices to reduce risk:

1. Check licensing requirements for the country of import
2. Look for red flags regarding end-use, the user, or shipment destination
3. Use due diligence when evaluating potential customers and end-use
4. When in doubt, obtain documentation
5. Obtain statements from importers that regulated items will not be re-exported or transferred without prior approval
6. Encourage employees in sales to escalate suspicious activity or customers
7. Use free sanctions/denied party search engines (OFAC or other reputable screening tools)
8. Conduct internal audits to ensure compliance
9. Work with dedicated trade compliance professionals to ensure you are compliant

The risk of violating export controls and sanctions is no longer limited to exports to obvious bad actors or sanctioned countries. Today’s supply chains require proactive screening, strong documentation, and a clear understanding of end-use controls. Allyn International’s trade compliance and consulting team can help companies assess these risks and implement controls designed to prevent violations before they occur. If you have questions about export controls or sanctions compliance, reach out to our team at sales@allynintl.com.

Contributor: Robert J. Freeman

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About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance.  Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North America, Europe, and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China and Prague, Czech Republic. For more information, visit www.allynintl.com.