China turns to Amazon to access high-end AI chips in the US, and their AI services

Aug. 23, 2024, 7:51 a.m.

Read time estimation: 4 minutes.

  4

Chinese organizations with ties to the government have been utilizing cloud services offered by Amazon and other US companies to gain access to sophisticated artificial intelligence (AI) chips and technologies that are otherwise restricted under US export regulations. Documents related to public tenders examined by Reuters reveal how these entities, due to US government restrictions preventing them from directly acquiring high-end AI chips, are employing cloud-based platforms to circumvent these limitations.

Over the past two years, the US has imposed strict controls on the export of high-end AI chips to China, aiming to curb the Chinese military’s technological advancements. However, these restrictions only apply to the physical transfer or export of technology, not to the access provided through cloud services.

Advertisement This loophole has allowed Chinese entities to gain access to advanced computing power and generative AI models, which are essential for the development of large-language models (LLMs) and other AI-driven technologies.

An investigation conducted by Reuters, examining over 50 tender documents published on Chinese databases over the past year, revealed that at least 11 Chinese entities sought access to US technologies or cloud services subject to restrictions. Among these, four explicitly named Amazon Web Services (AWS) as their cloud service provider, though they accessed AWS through Chinese intermediary companies rather than directly through AWS.

For instance, Shenzhen University spent approximately $28,000 on an AWS account to access cloud servers powered by NVIDIA A100 and H100 chips, which are essential for training large AI models like OpenAI’s ChatGPT.

The US has prohibited the export of these NVIDIA chips to China, but the university circumvented this restriction by obtaining the services through a local intermediary, Yunda Technology Ltd Co.

Similarly, Zhejiang Lab, a research institute working on its own LLM called GeoGPT, planned to spend around $25,000 on AWS cloud services because it couldn’t get sufficient computing power from domestic providers like Alibaba Cloud. Although the lab eventually did not follow through with the purchase, the intent underscores the reliance of Chinese entities on foreign cloud services to meet their AI needs.

The US government is aware of this workaround and has been actively seeking to close it. In April, legislation was introduced in Congress to grant the Commerce Department the authority to regulate remote access to US technology.

Advertisement Additionally, a proposed regulation would require US cloud computing services to verify the identity of users of large AI models and report any instances where these models are employed in a way that could facilitate malicious activities. The rule would also empower the Commerce Secretary to impose restrictions on certain customers.

AWS, which controls nearly a third of the global cloud infrastructure market, has stated that it adheres to all applicable US laws, including trade regulations governing the provision of services both within and outside of China.

However, questions remain regarding the effectiveness of these regulations, particularly as Chinese companies continue to pursue access to restricted technologies through intermediaries and cloud services.

Advertisement In addition to Amazon, Chinese entities have also sought access to Microsoft’s cloud services. For example, Sichuan University purchased 40 million Microsoft Azure OpenAI tokens to support a generative AI platform it was developing.

Similar to Amazon, Microsoft’s Azure service operates under US regulations, but the sale of these tokens to Chinese entities highlights the ongoing struggle to control the dissemination of advanced AI capabilities to China.

Amazon and other US companies have been capitalising on China’s growing demand for computing power, offering not only access to AI chips but also advanced AI models like Anthropic’s Claude. Despite the efforts to regulate access, Chinese organisations have found ways to utilise these models through cloud platforms, often by working with subsidiaries located in regions outside of China.

As the US government tightens its regulations, Chinese companies’ access to these technologies may face further limitations. However, the persistent demand for advanced AI capabilities suggests that these entities will continue to seek alternative methods to circumvent restrictions, raising concerns about the potential impact on global technological competition and national security.