China Bypasses US Bans on AI Chips Using Cloud Services, Raising Security Concerns

Reports reveal that Chinese firms are using cloud services to bypass US restrictions on AI chips, prompting concerns over national security and technology control.

State-Affiliated Enterprises Lead China's Tech Acquisition Efforts

In recent years, there has been a dramatic increase in the competition to create and implement the most advanced AI models; the US is taking measures to ensure that China cannot catch up by utilizing the technology that is created in the US.

The use of Amazon or its rivals' cloud services to access these restricted advanced semiconductor chips and AI capabilities has been uncovered by state-affiliated Chinese enterprises, according to a recent Reuters story.

Reuters reports that eleven Chinese companies have reportedly tried to get their hands on restricted US technology or cloud services after reviewing more than fifty public tender documents.

Amazon Cloud Used by Chinese Entities to Bypass US AI Chip Ban

Of the businesses that were examined, four specifically named Amazon Web Services (AWS) as a cloud provider. Nonetheless, instead of utilizing AWS directly, businesses accessed the services through intermediaries, which were Chinese enterprises.

According to one contract document from April 2024, the Chinese research institute Zhejiang Lab, which is developing its own LLM called GeoGPT, intends to pay 184,000 yuan ($25,783 USD) for cloud computing services from Amazon Web Services (AWS). It said that at the moment, its AI model cannot acquire sufficient computer power just from Alibaba in China.

The university in Shenzhen shelled out 200,000 yuan ($27,996 USD) for an Amazon Web Services account that gave them access to cloud servers with Nvidia A100 and H100 processors for some mystery project, according to another document.

Creative Strategies Emerge to Circumvent US Semiconductor Embargoes

The Chinese semiconductor sector has been very creative in its attempts to circumvent US embargoes in the last year. This involves utilizing both domestic chip manufacturers and new goods that were sent to China from Nvidia, the top chip manufacturer in the world.

In particular, Nvidia's A100 and its more powerful H100 chip—both of which were prohibited in September 2022—have been at the heart of the US's restricted AI products.

Coincidentally, the president of China has urged cooperation in the face of artificial intelligence (AI) and cyber development issues.

China's Military Access to AI Spurs Stricter US Technology Bans

Although they were also outright forbidden as of October 2023, the slower A800 and H800 chips were originally designed with the Chinese market in mind. Concerns about China's military's access to artificial intelligence were the US's rationale.

But tender documents discovered by Reuters in April 2024 showed that China had gotten their hands on the chips via servers run by Supermicro Dell.

However, Cointelegraph shares that these new revelations of Chinese access to US AI models and cutting-edge semiconductors aren't illegal in the US. Any transfer or export of goods, software, or technology is expressly forbidden under these rules.

AWS Confirms Compliance with US Trade Laws Amid Controversy

A representative from AWS informed Reuters that:

"AWS complies with all applicable U.S. laws, including trade laws, regarding the provision of AWS services inside and outside of China.”

The United States government is attempting to further limit access, including through the cloud, in response to China's efforts to circumvent its restrictions.

As the head of the US House of Representatives' Foreign Affairs Committee, Michael McCaul, put it, "time to address it" after years of worrying about the loophole.

Sichuan University Purchases OpenAI Tokens for Generative AI Platform

Many Chinese businesses have also targeted Microsoft cloud servers. One of these is Sichuan University, which stated in another tender document that it is creating an AI platform for generative models and is buying 40 million OpenAI tokens from Microsoft Azure.

Chinese export curbs on metals used mostly in semiconductor production have been tightened in the past in response to US restrictions.