Over the past two years, the US government has tightened regulations to prevent leading US AI chip designers, such as Nvidia and AMD, from selling high-performance AI chips to China, in an attempt to hinder Beijing's technological advancement.

However, accessing these AI chips and models through cloud services does not violate US regulations, as the law only governs the direct export or transfer of physical goods, software or technology.

Looking at 50 public tender documents from Chinese entities, at least 11 of them sought to access restricted US technologies in this way.

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The US has tightened regulations to prevent China from accessing advanced AI chips and AI models in recent years. Photo: Shutterstock

Four of them listed Amazon Web Services (AWS) as their cloud provider, accessing services through Chinese intermediaries rather than directly from AWS. The bid documents highlight the various strategies Chinese entities are using to secure computing power and access to generative AI models. They also show how U.S. companies are profiting from the Asian nation’s growing demand for computing resources.

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

US media reported that Shenzhen University spent 200,000 yuan (about $28,000) through an intermediary to access AWS cloud servers using Nvidia A100 and H100 chips, two chips banned from direct export to China under US regulations.

Similarly, research institute Zhejiang Lab looked to AWS cloud services to develop AI models due to insufficient computing power from local providers.

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.

Additionally, Chinese entities have also sought access to Microsoft's cloud services.

Efforts to tighten cloud access regulations

These findings have alarmed US lawmakers. Michael McCaul, chairman of the US House Foreign Affairs Committee, said this has been a concern of his for many years and stressed the need to address the loophole.

Pareekh Jain, CEO of Pareekh Consulting, agreed that the loophole has limited Chinese companies’ access to AI technology. He said the current business model, where cloud services are sold through resellers or intermediaries, complicates efforts to restrict and monitor end users.

In the long run, as cloud service regulations tighten, more business will likely flow through resellers in China, shifting the compliance burden from providers like AWS to these intermediaries.

In response to these concerns, a bill was introduced in Congress in April that would empower the US Department of Commerce to regulate remote access to US technology.

The department also proposed new rules that would require cloud services to verify users of large AI models and report to regulators when they are used for potentially malicious activities. The department could also impose bans on cloud customers, according to the proposal.

(According to CIO, Indiatimes)