US Treasury proposes rules to block American investments in AI and semiconductors
The US Treasury wants to put a tighter leash on where American capital can go. The department has proposed new rules that would block US investments in artificial intelligence and semiconductors for some foreign countries.
Washington has spent years controlling which chips leave the country. Now it is paying equal attention to which dollars leave the country to build them elsewhere.
The proposal lands on top of an existing framework that is already being enforced. That framework has already produced a penalty, and Congress has already ordered it to grow.
What Treasury is building on
The foundation is the Outbound Investment Security Program, or OISP. It took effect on January 2, 2025.
The program targets investments by US persons in certain Chinese entities. Its focus areas are semiconductors, quantum technologies, and artificial intelligence.
It works in two tiers. Some deals are prohibited outright, while others require Treasury to be notified.
The program traces back to Executive Order 14105, dated August 9, 2023. That order set the policy direction, and Treasury spent the following period turning it into enforceable rules.
The stated rationale is national security. The concern is that US money, and the expertise that often travels with it, could help accelerate sensitive technologies in countries Washington views as strategic competitors.
The first penalty, and why its size matters
Treasury did not wait long to show the program had teeth. On October 7, 2026, it announced its first civil penalty under the OISP.
The target was Amidi, LLC. Treasury fined the company $200,000 for failing to report an investment.
The investment itself was $92,478. It was made by Amidi’s Chinese subsidiary into Shanghai Qiongche Intelligent Technology, also known as Noematrix.
Noematrix specializes in embodied AI and robotics. Think of embodied AI as artificial intelligence with a physical body: software that controls machines operating in the real world rather than living only in a chatbot window.
The penalty was more than double the value of the deal that triggered it.
The case also highlights how investments can flow indirectly. The money in this instance moved through a Chinese subsidiary of a US company, not directly from an American entity.
Congress wants a wider net
The new proposal fits into a broader legislative push. On December 18, 2025, the Comprehensive Outbound Investment National Security Act of 2025, known as the COINS Act, was signed into law.
The COINS Act aims to broaden the OISP in two directions. It expands coverage to additional countries, and it adds new technology sectors.
Among the sectors added are high-performance computing and hypersonic systems. Those sit alongside the original focus on chips, quantum, and AI.
The law also gives Treasury a deadline. New rules are due by March 2027.
As of updates in October 2026, Treasury said it planned to release proposed regulations tied to the COINS Act within weeks. The proposal targeting AI and semiconductor investments in some foreign countries arrives against that backdrop.
A proposed rule is not yet a final rule. The framework could still change before Treasury locks it in, but the direction of travel looks fairly settled.
What this means for investors and companies
The immediate stakeholders are US investors with exposure to foreign tech companies. That includes venture firms, private equity funds, and corporations with overseas subsidiaries.
AI in particular is a sprawling category, and a company pitching itself as a robotics or software startup may still land inside the program’s definitions, as the Noematrix case suggests.
The expansion to additional countries adds another layer. Until now, the program centered on Chinese entities, and many compliance processes were likely built around that single focus.
Several things are worth watching from here. The first is which additional countries Treasury ultimately names, since that will determine how far the program reaches beyond China.
The second is how precisely Treasury defines covered activities in AI and semiconductors.
The third is the March 2027 deadline set by the COINS Act. Whether Treasury finalizes its rules on that timeline will shape how quickly firms need to adapt.
Finally, watch the enforcement pipeline. The Amidi case was the first civil penalty under the program, and how often Treasury follows it with more will signal how aggressively the expanded rules are likely to be policed.
