Chinese tech giant ByteDance, the company behind the popular app TikTok, has found a way to access Nvidia’s powerful AI chips for its US operations, bypassing strict US export controls aimed at preventing advanced technology from reaching China. By leasing the chips from US cloud computing provider Oracle, ByteDance is able to utilize this cutting-edge technology on American soil. This method has also caught the attention of other major Chinese tech companies like Alibaba and Tencent who are seeking similar arrangements.
While the US government had banned the direct sale of AI chips to China in 2022 citing national security concerns, ByteDance’s loophole of renting the chips from US-based providers like Oracle has raised eyebrows. Even though the current regulations do not explicitly prohibit Chinese companies from accessing these chips within the US, this practice goes against the intention of slowing China’s AI development and preventing technology misuse for military or surveillance purposes by Beijing. While some American cloud providers have refused such arrangements, Oracle has chosen to capitalize on the opportunity for revenue.
The US Commerce Department, responsible for enforcing export controls, proposed a rule requiring US cloud companies to verify foreign customers’ identities and report on AI model usage for potential misuse. However, this rule has faced opposition from cloud providers who argue the compliance burden outweighs any benefits. Even if this specific loophole is closed, Chinese tech giants with their own US data centers could still potentially purchase and use these restricted chips, creating further challenges for regulators in controlling the flow of advanced technology.
