Nvidia chip exports delayed as US license backlog grows

Thousands of US export license applications are delayed due to internal disruptions at the Department of Commerce, sources told Reuters.

The backlog affects companies exporting goods and technology globally, including to China.

The Bureau of Industry and Security (BIS), responsible for approvals, has not issued expected new rules and is dealing with staff departures and slowed communication with industry.

High-profile shipments, like Nvidia’s AI chips to China, are among those impacted, with billions of dollars in orders awaiting approval.

A US official said this is the longest backlog in more than 30 years.

The Commerce Department said licensing reviews now include stricter national security checks and are no longer automatic.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Export control disruptions follow familiar pattern during policy transitions

The current Commerce Department backlog mirrors disruptions seen during previous administrative policy shifts, particularly around China trade restrictions.

In 2018, when the Energy Department implemented new nuclear technology export restrictions to China, companies similarly faced confusion and delays due to inadequate stakeholder consultation and unclear policy implementation1.

During that earlier transition, U.S. firms with existing commercial relationships in China expressed concerns that new restrictions would harm their business prospects, with industry groups emphasizing the need for careful implementation to mitigate economic damage1.

Policy uncertainty during transitions consistently creates bottlenecks that can persist for months, giving competitors time to establish alternative supply relationships.

2️⃣ Processing delays create disproportionate competitive disadvantage in fast-moving sectors

The current 30-year record backlog represents a dramatic departure from recent efficiency standards, with potentially severe market consequences.

BIS averaged just 38 days per export license application in fiscal year 2023 while denying only 2% of 37,943 applications, suggesting the current delays aren’t primarily about stricter review standards but processing capacity[Original article].