Chinese AI Developers Outsmart US Chip Restrictions With Overseas Computing: Report

Chinese artificial intelligence developers are using foreign computing resources to get access to cutting-edge American chips like Nvidia’s A100 in a cunning move meant to evade strict US export regulations, according to The Wall Street Journal.

These developers are getting around the restrictions placed on direct imports of these highly sought-after chips by collaborating with brokers and using identity-mapping strategies taken from the cryptocurrency sector. This workaround is a reaction to the US government’s attempts to keep Chinese enterprises from obtaining the technology required for the development of cutting-edge artificial intelligence.

Although it is still possible to physically smuggle Nvidia chips through grey-market channels, the procedure is frequently difficult and cannot satisfy the enormous demand of major Chinese AI companies. This new approach provides Chinese developers looking to gain access to more covert and effective

According to the WSJ report, one entrepreneur helping Chinese companies overcome the hurdles is Derek Aw, a former bitcoin miner. He persuaded investors in Dubai and the US to fund the purchase of AI servers housing Nvidia’s powerful H100 chips. In June, Aw’s company loaded more than 300 servers with the chips into a data centre in Brisbane, Australia. Three weeks later, the servers began processing AI algorithms for a company in Beijing.

“There is demand. There is a profit. Naturally, someone will provide the supply,” Aw told the news portal.

Renting faraway computing power is nothing new, and many global companies shuffle data around the world using US companies’ services such as Google Cloud, Microsoft Azure, and Amazon Web Services. However, those companies, like banks, have “Know Your Customer” policies that may make it difficult for some Chinese customers to obtain the most advanced computing power.

Also, lawyers familiar with US sanctions believe that there is no legal breach by buyers, dealers, or middlemen who move computing power.

According to a Reuters report published in January, Chinese military bodies, state-run artificial intelligence research institutes, and universities have over the past year purchased small batches of Nvidia, opening new tab semiconductors banned by the US from exporting to China. The sales by largely unknown Chinese suppliers highlight the difficulties Washington faces, despite its bans, in completely cutting off China’s access to advanced US chips that could fuel breakthroughs in AI and sophisticated computers for its military.