Chinese firms bypass US export restrictions on AI chips using AWS cloud

Chinese firms are circumventing US export restrictions on advanced technologies by accessing them through cloud services provided by American companies like Amazon, according to a report from Reuters.

Over the past two years, the US government has tightened regulations that prevent top US AI chip designers, such as Nvidia and AMD, from selling their high-performance AI chips to China, aiming to curb their military’s technological advancements.

However, accessing these chips and AI models through cloud services does not violate US regulations, as the laws only govern the direct export or transfer of physical commodities, software, or technology. A Reuters review of more than 50 public tender documents from Chinese entities revealed that at least 11 of them have sought access to restricted US technologies via cloud services.

Among these, four entities explicitly named Amazon Web Services (AWS) as their cloud service provider, accessing the services through Chinese intermediaries rather than directly from AWS. These tender documents highlight the various strategies Chinese entities are using to secure advanced computing power and access to generative AI models. The report also shows how US companies are profiting from China’s increasing demand for computing resources.

“AWS complies with all applicable US laws, including trade laws, regarding the provision of AWS services inside and outside of China,” an AWS spokesperson said.

The Reuters report said that Shenzhen University spent 200,000 yuan (approximately $28,000) through an intermediary to access AWS cloud servers powered by Nvidia A100 and H100 chips, which are banned from direct export to China by US regulations. Similarly, Zhejiang Lab, a research institute, sought AWS cloud services for its AI model development due to inadequate computing power from local providers.

A query seeking comments from the US Department of Commerce remains unanswered.

Efforts to tighten regulations on cloud access

These findings have prompted concerns from US lawmakers. Michael McCaul, chair of the US House of Representatives Foreign Affairs Committee, emphasized the need to address this issue allowing foreign entities to remotely access advanced US technology via the cloud.

“This loophole has been a concern of mine for years, and we are long overdue to address it,” Michael McCaul, chair of the US House of Representatives Foreign Affairs Committee, told Reuters.

“Yes, this is a loophole that allows Chinese companies to access restricted AI technologies,” said Pareekh Jain, CEO of Pareekh Consulting. “The current business model, where cloud services are sold through resellers or intermediaries, complicates efforts to restrict and monitor end users. In the long term, as regulations on cloud services tighten, more business will likely flow through resellers in China, shifting the burden of compliance from providers like AWS to these intermediaries.”

In response to such concerns, legislation was introduced in Congress in April to give the US Commerce Department authority to regulate remote access to US technology. The department has also proposed new rules that would require cloud services to verify users of large AI models and report to regulators when these models are used for potentially malicious activities.

An AWS spokesperson, quoted in the report said, “We are aware the commerce department is considering new regulations, and we comply with all applicable laws in the countries in which we operate.” As Amazon continues to offer advanced AI chips and models, such as Anthropic’s Claude, through its cloud services, it faces scrutiny and regulatory challenges. The news agency claimed that following its inquiries, Amazon updated its Chinese-language posts to clarify the availability of some services and remo