Chinese monopoly entities turn to Amazon cloud and its rivals to access top US chips AI By Reuters

By Eduardo Baptista, Fanny Potkin and Karen Freifeld

BEIJING/SINGAPORE/NEW YORK (Reuters) – Chinese state-linked entities are using cloud services provided by Amazon (NASDAQ: ) or its rivals to access advanced U.S. chips and artificial intelligence capabilities they cannot otherwise acquire, they have shown recent public tender documents.

The US government has restricted the export of high-end AI chips to China for the past two years, citing the need to limit the capabilities of the Chinese military.

However, providing access to such advanced AI chips or models via the cloud is not a violation of US regulations, as 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 sought access to restricted US cloud technologies or services.

Among them, four explicitly named Amazon Web Services (AWS) as their cloud service provider, although they accessed the services through Chinese intermediary companies rather than from AWS directly.

The tender documents, first reported by Reuters, show the breadth of strategies Chinese entities are using to secure advanced computing power and access generative AI models. They also highlight how American companies are capitalizing on China’s growing demand for computing power.

“AWS complies with all applicable US laws, including trade laws, in providing AWS services inside and outside of China,” said a spokesperson for the Amazon cloud company.

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 access cloud servers powered by Nvidia (NASDAQ: ) A100 and H100 chips for an unspecified project, according to a March tender document. It received this service through an intermediary, Yunda Technology Ltd Co, the document said.

Exports to China of the two Nvidia chips, which are used to power large language models (LLMs) such as OpenAI’s ChatGPT, are banned by the US.

Shenzhen University and Yunda Technology did not respond to requests for comment. Nvidia declined to comment on Shenzhen University’s spending or any of the bids from the other Chinese entities.

Zhejiang Lab, a research institute developing its own LLM, GeoGPT, said in a tender document in April that it planned to spend 184,000 yuan to acquire AWS cloud computing services because its AI model could not get enough power calculation from domestic products. Alibaba (NYSE: ).

A spokesman for Zhejiang Lab said it had not completed the purchase, but did not respond to questions about the reasoning behind that decision or how it met LLM’s computing power requirements. Alibaba’s cloud unit, Alicloud, did not respond to a request for comment.

Reuters could not determine whether the purchase had taken place or not.

The US government is now trying to tighten regulations to restrict cloud access.

“This loophole has been a concern of mine for years and is long overdue,” Michael McCaul, chairman of the U.S. House Foreign Affairs Committee, said in a statement, referring to access from distance of advanced USA. cloud computing by foreign entities.

Legislation was introduced in Congress in April to empower the Commerce Department to regulate remote access to US technology, but it is unclear if and when it will pass.

A department spokesman said it was working closely with Congress and “is 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 US cloud computing services to vet large users of AI models and report to regulators when they use US cloud computing services to train AI models large capable of “cyber-enabled malicious activity”.

The rule, which has not been finalized, would also allow the commerce secretary to impose bans on customers.

“We are aware that the Department of Commerce is considering new regulations and we comply with all applicable laws in the countries in which we operate,” the AWS spokesperson said.

CLOUD DEMAND IN CHINA

Chinese entities are also seeking access to Microsoft’s (NASDAQ: ) cloud services.

In April, Sichuan University said in a tender document that it is building a generative AI platform and is buying 40 million Microsoft Azure OpenAI tokens to support the delivery of this project. The university’s procurement document from May showed that Sichuan province Xuedong Technology Co Ltd supplied the chips.

Microsoft did not respond to requests for comment. Sichuan University and Sichuan Province Xuedong Technology did not respond to requests for comment on the acquisition.

OpenAI said in a statement that its own services are not supported in China and that Azure OpenAI operates according to Microsoft policies. He did not comment on the auctions.

The University of Science and Technology of China (USTC) Suzhou Advanced Research Institute said in a March tender document that it wants to lease 500 cloud servers, each powered by eight Nvidia A100 chips, for an unspecified purpose.

The bid was fulfilled by Hefei Advanced Computing Center Operation Management Co Ltd, a procurement document in April showed, but the document did not name the cloud service provider and Reuters could not determine its identity.

USTC was added to a US export control list known as the “Entity List” in May for purchasing US quantum computing technology that could help China’s military and for involvement in the development of its nuclear program.

USTC and the Hefei Advanced Computing Center did not respond to requests for comment.

Beyond RESTRICTED AI Chips

Amazon has given Chinese organizations access not only to advanced AI chips but also to advanced AI models, such as Anthropic’s Claude, that they cannot otherwise access, according to public postings, auctions and marketing materials reviewed by Reuters.

“Bedrock offers a selection of leading LLMs, including prominent closed-source models such as Anthropic’s Claude 3,” Chu Ruisong, president of AWS Greater China, said at a generative AI-themed conference in Shanghai in May , referring to its cloud platform.

In various Chinese-language posts to AWS developers and customers, Amazon highlighted the opportunity to try out “world-class AI models” and mentioned Chinese gaming firm Source Technology as one of its customers using Claude.

Amazon has dedicated sales teams serving Chinese customers at home and abroad, according to two former company executives.

After Reuters contacted Amazon for comment, it updated dozens of posts on its Chinese-language channels with a note saying some of its services were not available in its cloud regions in China. It also removed several promotional posts, including the one about Source Technology. Amazon did not give a reason for removing the posts and did not respond to a Reuters question about it.

“Amazon Bedrock customers are subject to Anthropic’s End User License Agreement, which prohibits access to Claude in China through both Amazon’s Bedrock API (application programming interface) and Anthropic’s own API,” he said the AWS spokesperson.

Anthropic said it does not support or allow customers or end users in China to access Claude.

“However, subsidiaries or product divisions of companies headquartered in China can use Claude if the subsidiary itself is located in a supported region outside of China,” said an Anthropic spokesperson.

Source Technology did not respond to a request for comment.

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