The RESTRICT Act is designed to prevent the most advanced computer chips from being sold to countries that the U.S. considers security threats. Specifically, it blocks the export of cutting-edge artificial intelligence chips to countries like China, Russia, Iran, and North Korea, as well as Hong Kong and Macau. The law requires anyone wanting to export these advanced chips to get a license from the Commerce Department, and licenses will be automatically denied if the chips are going to companies based in or controlled by these countries of concern.

However, the law does create a workaround for American companies operating overseas. If a U.S. company abroad wants to use these advanced chips and meets strict security requirements, they can get approved to receive them without a license. To qualify, these companies must be mostly owned by Americans (no more than 10% foreign ownership from countries of concern), have strong physical and cybersecurity protections, and undergo annual audits to prove they're not misusing the technology. The law essentially tries to balance national security concerns about advanced chip technology falling into hostile hands while still allowing legitimate American businesses to operate internationally. The rules will automatically expire after five years unless Congress extends them, and the Commerce Department can update the definition of what counts as an 'advanced chip' as technology evolves.