2024

Azure

Bitcoin

April

The race to develop and deploy the most powerful artificial intelligence models has rapidly escalated over the past couple of years and the United States is <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/us-considers-tightening-restrictions-on-ai-chip-exports" rel="null" target="null" text="null">making sure that China can’t catch up</a> using US-made technology.&nbsp;
However, a new Reuters <a data-ct-non-breakable="null" href="https://www.reuters.com/technology/chinese-entities-turn-amazon-cloud-its-rivals-access-high-end-us-chips-ai-2024-08-23/" rel="noopener noreferrer nofollow" target="_blank" text="null">report</a> revealed that state-affiliated Chinese entities have been using cloud services from Amazon or its competitors to gain access to these banned advanced semiconductor chips and AI capabilities.&nbsp;
<h2 id="strong-subverting-restrictions-strong">Subverting restrictions</h2>
According to Reuters, a review of over 50 public tender documents showed that at least 11 Chinese entities have sought access to restricted US technologies or cloud services.&nbsp;
Among the entities analyzed, four explicitly cited Amazon Web Services (AWS) as a cloud service provider. However, the entities accessed the services via middle-men Chinese companies rather than directly from AWS.
The investigation found in one tender document from April 2024 that Zhejiang Lab, a Chinese research institute working on its own LLM, GeoGPT, said it plans to spend 184,000 yuan ($25,783 USD) to purchase AWS cloud computing services. It said its AI model is currently unable to obtain enough computing power using only China’s own Alibaba.&nbsp;
Another document showed that Shenzhen University spent 200,000 yuan ($27,996 USD) on an AWS account, accessing cloud servers powered by Nvidia A100 and H100 chips for an unspecified project.&nbsp;
Over the past year, despite US embargos, the Chinese chip market has been <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/china-ai-chip-market-expansion-despite-us-export-restrictions" rel="null" target="null" text="null">actively finding ways to maneuver</a> its restrictions. This includes <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/china-is-developing-ai-without-us-chips-here-s-how" rel="null" target="null" text="null">turning to local chip makers</a> and relying on <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/nvidia-to-release-special-chip-for-china-subverts-us-export-controls" rel="null" target="null" text="null">new products from the world’s leading chip maker Nvidia</a> that were able to be shipped out to China.&nbsp;
Nvidia’s chips have been at the center of the US’s restricted AI products, particularly its A100 and the more powerful H100 chip, which were banned in September 2022.&nbsp;
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/chinese-president-calls-for-unity-on-ai-challenges-and-cyber-development" rel="null" target="null" text="null">Chinese president calls for unity on AI challenges and cyber development</a>
Initially, its slower A800 and H800 chips were developed to be sold on the Chinese market, though they were also banned as of October 2023. The US cited the need to limit the Chinese military’s AI capabilities.
However, in April 2024, Reuters <a data-ct-non-breakable="null" href="https://www.reuters.com/world/china/china-acquired-recently-banned-nvidia-chips-super-micro-dell-servers-tenders-2024-04-23/" rel="noopener noreferrer nofollow" target="_blank" text="null">found</a> tender documents that revealed China gaining access to the chips via Supermicro Dell servers.&nbsp;
<h2 id="strong-restrictions-tightening-strong">Restrictions tightening</h2>
These recent findings of China accessing the US’s advanced chips and AI models, however, are not a violation of US regulations. The regulations specifically target the export or transfer of commodities, software or the technology itself.
An AWS spokesperson told Reuters that:&nbsp;
<blockquote>
 "AWS complies with all applicable U.S. laws, including trade laws, regarding the provision of AWS services inside and outside of China.”
</blockquote>
The US government is responding to China’s attempts to subvert its restrictions by trying to tighten restrictions even further to include access via the cloud.&nbsp;
Michael McCaul, the chair of the US House of Representatives Foreign Affairs Committee, said he has been concerned with the loophole for years and it’s “time to address it.”&nbsp;
Microsoft cloud servers have also been targeted by many Chinese entities, including Sichuan University, which said in another tender document that it is developing a generative AI platform and purchasing 40 million Microsoft Azure OpenAI tokens.&nbsp;
In the past, China has responded to the US’s restrictions by tightening controls, including <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/china-to-tighten-control-on-exports-of-ai-chip-making-materials" rel="null" target="null" text="null">export controls on metals</a> predominantly used to manufacture semiconductors.
<a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/ai-more-power-hungry-bitcoin-profits-pose-risks-bitcoin-miners/" rel="null" target="null" text="null">Magazine: AI may already use more power than Bitcoin — and it threatens Bitcoin mining</a>
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China accessing high-level AI chips banned by the US: Report

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