By Eduardo Baptista, Fanny Potkin and Karen Freifeld
BEIJING/SINGAPORE/NEW YORK (Reuters) – State-linked Chinese entities are using cloud services from Amazon (NASDAQ:) or its rivals to access advanced U.S. chips and artificial intelligence capabilities they could not otherwise acquire, it has emerged from recent public tender documents.
The US government has restricted exports of high-end AI chips to China over the past two years, citing the need to limit the capabilities of the Chinese military.
However, providing access to such chips or advanced AI models via the cloud does not violate US regulations, as only the export or transfer of raw materials, software or technology is regulated.
A Reuters review of more than 50 tender documents posted in publicly available Chinese databases over the past year found that at least 11 Chinese entities have sought access to restricted U.S. technologies or cloud services.
Four of these explicitly named Amazon Web Services (AWS) as a cloud service provider, although they accessed the services through Chinese intermediaries rather than directly through AWS.
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 underscore how American companies are benefiting from China’s growing demand for computing power.
“AWS complies with all applicable U.S. laws, including trade laws, regarding the provision of AWS services within and outside China,” said a spokesperson for Amazon’s cloud business.
According to research firm Canalys, AWS controls nearly a third of the global cloud infrastructure market. In China, AWS is the sixth largest provider of cloud services, 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 showed.
Export to China of the two Nvidia chips, used to power large language model (LLM) such as OpenAI’s ChatGPT, has been 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 on the deals of 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 on purchasing AWS cloud computing services because its AI model could not get enough home-grown computing power . Alibaba.com (NYSE:).
A spokesperson for Zhejiang Lab said it was not going through with the purchase, but did not respond to questions about the reasoning behind the decision or how it met the computing power requirements of its LLM. Alibaba’s cloud division, Alicloud, did not respond to a request for comment.
Reuters was unable to determine whether or not the purchase went through.
The US government is now trying to tighten regulations to limit cloud access.
“This loophole has concerned me for years, and we agreed to it far too late,” Michael McCaul, chairman of the US House of Representatives Foreign Affairs Committee, told Reuters in a statement, referring to the remote access of advanced US computing via the cloud by foreign entities.
In April, legislation was introduced in Congress to give the Commerce Department the authority to regulate remote access to U.S. technology, but it is not clear if or when this legislation will be passed.
A spokesperson for the department said it was working closely with Congress and was “seeking additional resources to strengthen our existing controls that restrict PRC companies from accessing advanced AI chips through remote access to cloud computing capabilities.”
The Commerce Department also proposed a rule in January that would require U.S. cloud computing services to authenticate and report to regulators users of large AI models when they use U.S. cloud computing services to train large AI models capable of “malicious cyber activity.”
The rule, which has not yet been finalized, would also allow the Commerce Secretary to impose bans on customers.
“We are aware that 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.
CLOUD DEMAND IN CHINA
The Chinese entities are also seeking access to Microsoft’s (NASDAQ:) cloud services.
In April, Sichuan University said in a tender document that it was building a generative AI platform and purchasing 40 million Microsoft Azure OpenAI tokens to support the implementation of this project. The university’s May tender document showed that Sichuan Province Xuedong Technology Co Ltd supplied the tokens.
Microsoft did not respond to requests for comment. Sichuan University and Sichuan Province Xuedong Technology did not respond to requests for comment on the purchase.
OpenAI said in a statement that its own services are not supported in China and that Azure OpenAI operates under Microsoft’s policies. There was no response to the tenders.
The Suzhou Institute of Advanced Research of the University of Science and Technology of China (USTC) said in a tender document in March that it wanted to rent 500 cloud servers, each powered by eight Nvidia A100 chips, for an unspecified purpose.
The tender was conducted by Hefei Advanced Computing Center Operation Management Co Ltd, a tender document showed in April, but the document did not identify the cloud service provider and Reuters was unable to identify it.
USTC was added to a U.S. export control list known as the “Entity List” in May for acquiring U.S. quantum computing technology that could help China’s military and for its involvement in developing its nuclear program.
USTC and Hefei Advanced Computing Center did not respond to requests for comment.
BEYOND AI CHIPS LIMITED
Amazon has offered Chinese organizations access not only to advanced AI chips, but also to advanced AI models such as Anthropic’s Claude, which they would not otherwise have access to, according to public communications, tenders and marketing materials reviewed by Reuters.
“Bedrock offers a selection of leading LLMs, including prominent closed-source models such as Claude 3 from Anthropic,” Chu Ruisong, president of AWS Greater China, told a generative AI theme conference in Shanghai in May, referring to the cloud platform.
In several Chinese-language messages for AWS developers and customers, Amazon highlighted the opportunity to try out “world-class AI models” and named Chinese gaming company Source Technology as among its customers using Claude.
Amazon has dedicated sales teams serving Chinese customers at home and abroad, two former company executives said.
After Reuters contacted Amazon for comment, it updated dozens of messages on its Chinese-language channels to note that some of its services were not available in China’s cloud regions. Several promotional posts have also been removed, including the one about Source Technology. Amazon did not give a reason for removing the messages or answer Reuters’ question about it.
“Amazon Bedrock customers are subject to Anthropic’s end user license agreement, which prohibits access to Claude in China, either through Amazon’s Bedrock API (application programming interface) or through Anthropic’s own API,” the AWS spokesperson said.
Anthropic said it does not support or allow customers or end users in China to access Claude.
“However, subsidiaries or product divisions of Chinese-headquartered companies may use Claude if the subsidiary itself is located in a supported region outside of China,” an Anthropic spokesperson said.
Source Technology did not respond to a request for comment.
($1 = 7.1440 renminbi)
