Chinese entities turn to Amazon cloud and its rivals to access high-end US chips, AI
By Eduardo Baptista, Fanny Potkin and Karen Freifeld
23 August 2024
State-linked Chinese entities are using cloud services provided by Amazon or its rivals to access advanced U.S. chips and artificial intelligence capabilities that they cannot acquire otherwise, recent public tender documents showed.
The U.S. government has restricted the export of high-end AI chips to China over the past two years, citing the need to limit the Chinese military’s capabilities.
Providing access to such chips or advanced AI models through the cloud, however, is not a violation of U.S. regulations since only exports or transfers of a commodity, software or technology are regulated.
A Reuters review of more than 50 tender documents posted over the past year on publicly available Chinese databases showed that at least 11 Chinese entities have sought access to restricted U.S. technologies or cloud services.
Among those, four explicitly named Amazon Web Services (AWS) as a cloud service provider, though they accessed the services through Chinese intermediary companies rather than from AWS directly.
The tender documents, which Reuters is the first to report on, show the breadth of strategies Chinese entities are employing to secure advanced computing power and access generative AI models. They also underscore how U.S. companies are capitalising on China’s growing demand for computing power.
“AWS complies with all applicable U.S. laws, including trade laws, regarding the provision of AWS services inside and outside of China,” a spokesperson for Amazon’s cloud business said.
AWS controls nearly a third of the global cloud infrastructure market, according to research firm Canalys. In China, AWS is the sixth-largest cloud service provider, according to research firm IDC.
Shenzhen University spent 200,000 yuan ($27,996) on an AWS account to gain access to cloud servers powered by Nvidia A100 and H100 chips for an unspecified project, according to a March tender document. It got this service via an intermediary, Yunda Technology Ltd Co, the document showed.
Exports to China of the two Nvidia chips, which are used to power large-language models (LLM) such as OpenAI’s ChatGPT, are banned by the U.S.
Shenzhen University and Yunda Technology did not respond to requests for comment. Nvidia declined to comment on Shenzhen University’s spending or on any of the other Chinese entities’ deals.
Zhejiang Lab, a research institute developing its own LLM, GeoGPT, said in a tender document in April that it intended to spend 184,000 yuan to purchase AWS cloud computing services as its AI model could not get enough computing power from homegrown Alibaba (9988.HK), opens new tab.
A spokesperson for Zhejiang Lab said that it did not follow through with the purchase but did not respond to questions about the reasoning behind this decision or how it met its LLM’s computing power requirements. Alibaba’s cloud unit, Alicloud, did not respond to a request for comment.
Reuters could not establish whether or not the purchase went ahead.
The U.S. government is now trying to tighten regulations to restrict access through 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 U.S. House of Representatives Foreign Affairs Committee, told Reuters in a statement, referring to the remote access of advanced U.S. computing through the cloud by foreign entities.
Legislation was introduced in Congress in April to empower the commerce department to regulate remote access of U.S. technology, but it is not clear if and when it will be passed.
A department spokesperson said it was working closely with Congress and “seeking additional resources to strengthen our existing controls that restrict PRC companies from accessing advanced AI chips through remote access to cloud computing capability.”
The commerce department also proposed a rule in January that would require U.S. cloud computing services to verify large AI model users and report to regulators when they use U.S. cloud computing services to train large AI models capable of “malicious cyber-enabled activity”.
The rule, which has not been finalized, would also enable the commerce secretary to impose prohibitions on customers.
“We are aware the commerce department is considering new regulations, and we comply with all applicable laws in the countries in which we operate,” the AWS spokesperson said.
