The Trump administration has delayed adding more than 100 Chinese companies to the U.S. Commerce Department’s Entity List, even as it simultaneously announced a $500 million investment in American startup SandboxAQ to boost domestic semiconductor material development. The dual moves highlight a delicate balancing act between national security concerns and efforts to avoid escalating trade tensions with Beijing.
According to Reuters, the blacklist postponement affects high-profile firms such as AI startup DeepSeek and memory chipmaker ChangXin Memory Technologies (CXMT), both approved for the Entity List by an interagency committee but never formally published. No new Entity List additions have been posted since October — the longest gap in over a decade. Jeffrey Kessler, Under Secretary of Commerce for Industry and Security, reportedly began advocating for the hold in late 2025 to reduce friction with China.
Companies on the list face strict export restrictions: U.S. firms cannot ship goods, software, or technology without a license that is almost always denied. DeepSeek, which roiled global tech markets in January 2025 with its low-cost AI model, is flagged for supporting Chinese military and intelligence operations and for attempting to obtain advanced U.S. chips through Southeast Asian shell companies. “The Entity List is like whack-a-mole and you’ve got to keep whacking the moles,” said Philip Luck of the Center for Strategic and International Studies. Former Commerce official Kevin Kurland warned that the pause “demonstrates that trade policy is overshadowing the use of a critical national security tool.”
Meanwhile, the Commerce Department’s $500 million award to SandboxAQ — a quantum-AI startup valued at $5.75 billion and backed by Nvidia — will fund the development of alternative chemicals and materials for U.S. chip plants. The company uses physics-based AI models trained on laboratory data, not human language, to tackle problems like finding replacements for toxic PFAS “forever chemicals,” catalysts for chip fabrication, and rare-earth-free permanent magnets and batteries. The government will receive a minority, non-voting equity stake in the firm.
China’s foreign ministry pushed back, urging Washington to stop “politicizing, instrumentalizing, and weaponizing” economic and technology issues, while spokesperson Lin Jian reiterated Beijing’s opposition to export controls. The Bureau of Industry and Security declined to comment on the blacklist delay and has also not replaced a Biden-era AI chip export rule, leaving a potential policy gap that may allow chips to reach Chinese entities overseas.
