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

Chinese state-linked entities have turned to cloud services provided by Amazon and other US companies to access advanced artificial intelligence (AI) chips and capabilities that are otherwise restricted under US export regulations. Public tender documents reviewed by Reuters reveal how these entities, unable to directly acquire high-end AI chips due to US government restrictions, are leveraging cloud-based platforms to bypass 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.

This loophole has enabled Chinese entities to gain access to advanced computing power and generative AI models, which are critical for developing large-language models (LLMs) and other AI-driven technologies.

A Reuters investigation into more than 50 tender documents posted on Chinese databases over the past year showed that at least 11 Chinese entities sought access to restricted US technologies or cloud services. Among these, four specifically named Amazon Web Services (AWS) as their cloud service provider, though they accessed AWS through Chinese intermediary companies rather than directly from 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.

Exports of these NVIDIA chips to China are banned by the US, but the university circumvented this by procuring 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 loophole and has been working to close it. In April, legislation was introduced in Congress to empower the Commerce Department to regulate remote access to US technology.

Additionally, a proposed rule would require US cloud computing services to verify the identity of large AI model users and report when these models are used in a manner that could enable malicious activities. The rule would also allow the Commerce Secretary to impose prohibitions on certain customers.

AWS, which controls nearly a third of the global cloud infrastructure market, has stated that it complies with all applicable US laws, including trade laws related to the provision of services inside and outside of China.

However, concerns remain about how effectively these regulations are being enforced, especially as Chinese entities continue to seek access to restricted technologies through intermediaries and cloud-based platforms.

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.

Like Amazon, Microsoft’s Azure service operates under US regulations, but the sale of such tokens to Chinese entities highlights the ongoing challenges in controlling the flow 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, the ability of Chinese entities to access these technologies could be further restricted. However, the continued demand for advanced AI capabilities suggests that these entities will keep seeking new methods to bypass restrictions, raising concerns about the potential impact on global technology competition and national security.