Artificial intelligence groups targeted by the US are using third parties to get around chip export controls.
Chinese artificial intelligence companies are avoiding export controls and accessing high-end US chips through intermediaries, according to the Financial Times. The machinations of the Chinese firms is revealing loopholes and defects in the US sanctions regime, FT reports.
In the fall of 2022, the Biden Administration imposed unilateral export controls that barred US companies from selling advanced chipmaking equipment and high-end semiconductors to Chinese groups, expanding the sanctions regime which had previously only targeted specific blacklisted companies such as IFLYTEK, Dahua Technology, and Megvii Technology over allegations they aided Beijing in the suppression of its Uyghur minority group.
Renting high end chips by the hour
However, AI surveillance groups targeted by these US sanctions have found ways to obtain restricted technology by using cloud providers and rental arrangements with third parties. In addition to using intermediaries, the groups are also purchasing chips through subsidiary companies in China, says the FT.
iFlytek, a state-backed voice recognition company on the original Uyghur blacklist, has been renting access to Nvidia’s A100 chips, which it uses to develop new AI applications and services, according to FT’s sources.
SenseTime, a facial recognition developer that was sanctioned at the same time as iFlytek, has used intermediaries to purchase banned components from the US, FT’s sources reveal.
Privately controlled cloud computing companies also provide access to high-end US chips. For example, AI-Galaxy, a Shanghai-based cloud computing company charges $10 for one-hour access to eight of its A100 Nvidia chips. The company was founded by former employees from Nvidia and AliCloud.
Presenting a “challenge” to US authorities
The ability of Chinese AI groups to continue accessing Nvidia’s crucial high-end chips and other cutting-edge technology “underlines the challenge the US faces in enforcing its trade restrictions against Chinese companies”, FT noted.
A US Commerce Department spokesperson told FT that its Bureau of Industry and Security “vigorously investigates potential violations of export controls but does not comment on specific allegations”.
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