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Chinese artificial intelligence companies bypass regulations to obtain American high order chips

(London) The Financial Times reported that Chinese artificial intelligence companies are using a third party to bypass US export controls to obtain US higher-order chips (also known as chips), which has exposed possible loopholes in Washington's containment measures against the development of cutting-edge technology in Beijing.

The report quoted multiple sources as saying that Chinese artificial intelligence (AI) companies affected by US sanctions can borrow US higher-order chips by using cloud service providers or entering into lease agreements with third parties, or purchase these chips through subsidiaries in China.

Two employees familiar with the situation at iFlytek, a Chinese speech recognition technology company, disclosed that the Chinese government supported company was sanctioned by the United States in 2019, but still has been renting Nvidia's A100 chips.
This chip plays a crucial role in the competition to develop innovative artificial intelligence applications and services.

Three senior employees of SenseTime, a Chinese face recognition technology company, said that SenseTime purchased prohibited components from the United States through subsidiaries that were not listed on the United States entity list. Shangtang Technology was also blacklisted by the United States in 2019.

Some privately held cloud technology companies are also channels for Chinese companies to obtain higher-order chips from the United States.

AI Galaxy, founded by former employees of Nvidia and Alibaba Cloud and headquartered in Shanghai, provides Nvidia A100 wafer rental services.

In October last year, the United States banned the sale of higher-order wafers and advanced wafer manufacturing equipment to China. An executive familiar with the operations of iFLYTEK said, "iFLYTEK cannot purchase Nvidia chips, but this is not a problem because it can rent chips and use computer clusters from other companies to train our data sets."

It is reported that US export controls on China have led to more computer clusters supported by the Chinese government. A Zhejiang official said, "Some localities (governments and enterprises) have also built or are building artificial intelligence computing centers to provide cloud rental services for enterprises. This is part of the new infrastructure construction supported by national policies."

IFLYTEK did not respond to a request for comment from the Financial Times. Shangtang Technology pointed out that the company strictly abides by various domestic and foreign trade related regulations.

A spokesman for the US Department of Commerce declined to comment on individual companies, but pointed out that the Department of Commerce's Industry and Security Bureau would actively investigate possible violations of export controls.

Experts pointed out that US export control measures do not cover cloud service providers. An executive from an American technology giant with operations in China revealed that the company's US legal team had concerns about providing cloud services involving A100 chips, but ultimately determined that this did not violate export controls.