By Eduardo Baptista, Fanny Potkin and Karen Freifeld
BEIJING/SINGAPORE/NEW YORK (Reuters) – Chinese state-affiliated companies are using cloud services from Amazon or its rivals to access advanced U.S. chips and artificial intelligence they would otherwise not be able to acquire, recent tender documents show.
Over the past two years, the US government has restricted the export of advanced AI chips to China, citing the need to limit the capabilities of the Chinese military.
However, allowing access to such chips or sophisticated AI models via the cloud does not constitute a violation of US regulations, as only the export or transfer of goods, software or technologies is regulated.
A Reuters review of more than 50 tender documents published in publicly available Chinese databases last year found that at least 11 Chinese companies have sought to access restricted U.S. technologies or cloud services.
Four of these companies specifically named Amazon Web Services (AWS) as a provider of cloud services, even though they accessed the services through Chinese intermediaries and not directly from AWS.
The tender documents, first reported by Reuters, show the range of strategies Chinese companies are using to secure advanced computing power and access generative AI models. They also underscore how U.S. 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 inside and outside of 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 cloud service provider, according to research firm IDC.
According to a March tender document, Shenzhen University spent 200,000 yuan ($27,996) on an AWS account to gain access to cloud servers running Nvidia A100 and H100 chips for an unspecified project. It obtained the service through an intermediary, Yunda Technology Ltd Co, the document shows.
The US bans the export to China of the two Nvidia chips used to run large language models (LLM) such as OpenAI’s ChatGPT.
Shenzhen University and Yunda Technology did not respond to requests for comment. Nvidia declined to comment on Shenzhen University’s spending or the deals of other Chinese companies.
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 purchase AWS cloud computing services because its AI model could not get enough computing power from domestic company Alibaba.
A spokesperson for Zhejiang Lab said the purchase had not gone through, but did not answer questions about the reasons for the decision or how it would meet LLM’s computing needs. Alibaba’s cloud unit Alicloud did not respond to a request for comment.
Reuters could not determine whether the purchase took place or not.
The US government is now trying to restrict access via the cloud through stricter regulations.
“This loophole has concerned me for years, and it is long overdue that we close it,” Michael McCaul, chairman of the U.S. House Foreign Affairs Committee, said in a statement to Reuters, referring to foreign companies’ remote access to sophisticated U.S. computers via the cloud.
In April, a bill was introduced in Congress that would give the Commerce Department the authority to regulate remote access to U.S. technology, but it is unclear if and when it will pass.
A department spokesman said they are working closely with Congress and “seeking additional resources to strengthen our existing controls that prevent PRC companies from remotely accessing advanced AI chips using cloud computing capabilities.”
The Commerce Department also proposed a rule in January that would require U.S. cloud computing services to screen users of large-scale AI models and report to regulators if they use U.S. cloud computing services to train large-scale AI models capable of “malicious cyber activity.”
The regulation, which has not yet been finalized, would also allow the Secretary of Commerce 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
The Chinese companies are also seeking access to Microsoft’s cloud services.
In April, Sichuan University announced 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 procurement document in May showed that Sichuan Province Xuedong Technology Co Ltd supplied the tokens.
Microsoft did not respond to requests for comment. Sichuan University and Sichuan Province’s 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 guidelines. It had no comment on the tenders.
The Suzhou Institute of Advanced Research at the University of Science and Technology of China (USTC) announced 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, according to an April procurement document, but the cloud service provider was not named in the document and Reuters was unable to determine its identity.
The USTC was placed on the Entity List, a US export control list, in May because it acquired US quantum computing technology that could help the Chinese military and because it was involved in the development of its nuclear program.
USTC and Hefei Advanced Computing Center did not respond to requests for comment.
BEYOND LIMITED AI CHIPS
According to public posts, tenders and marketing materials seen by Reuters, Amazon has offered Chinese organizations access not only to advanced AI chips, but also to advanced AI models like Anthropics’ Claude that they would not otherwise have access to.
“Bedrock offers a selection of leading LLMs, including prominent closed-source models such as Anthropic’s Claude 3,” said Chu Ruisong, president of AWS Greater China, at a generative AI conference in Shanghai in May, referring to the company’s cloud platform.
In various Chinese-language posts for AWS developers and customers, Amazon highlighted the opportunity to try out “best-in-class AI models” and mentioned Chinese gaming company Source Technology as one of its customers using Claude.
According to two former company executives, Amazon has its own sales teams that serve Chinese customers at home and abroad.
After Reuters asked Amazon for comment, Amazon updated dozens of posts on its Chinese-language channels to say that some of its services were unavailable in its cloud regions in China. It also deleted several promotional posts, including one about Source Technology. Amazon did not give a reason for removing the posts and did not respond to a Reuters request for comment.
“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,” the AWS spokesperson said.
Anthropic stated that 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 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 US dollar = 7.1440 Chinese renminbi yuan)
(Reporting by Eduardo Baptista, Fanny Potkin and Karen Freifeld; additional reporting by Krystal Hu, Alexandra Alper and the Beijing newsroom; editing by Miyoung Kim and Muralikumar Anantharaman)
