Chinese Firms Reportedly Accessing Nvidia’s Advanced AI Chips Using AWS, Microsoft Cloud Services, Bypassing U.S. Restrictions – Amazon.com (NASDAQ:AMZN), Dell Technologies (NYSE:DELL)

Chinese state-linked entities reportedly using cloud services Amazon.com Inc. AMZN and other suppliers to bypass US export restrictions and gain access to advanced Nvidia Corp. NVDA integrated circuits and artificial intelligence capabilities.

What happened:The U.S. export restrictions were imposed over the past two years to limit the capabilities of the Chinese military by restricting access to advanced AI chips. But those entities have found a loophole by using cloud services that are not considered a violation of U.S. regulations because they only regulate the export or transfer of goods, software or technology, Reuters reported on Friday.

A Reuters analysis of more than 50 tender documents published in publicly available Chinese databases over the past year found at least 11 Chinese entities seeking access to proprietary U.S. technologies or cloud services.

Four of these entities explicitly designated Amazon Web Services (AWS) as their cloud service provider, accessing them through Chinese intermediary companies.

For example, Shenzhen University spent 200,000 yuan ($27,996) on an AWS account to access cloud servers powered by Nvidia A100 and H100 chips for an undisclosed project. The university obtained the service through an intermediary, Yunda Technology Ltd Co., we read in the report.

Meanwhile, the U.S. government is considering tougher regulations to restrict access via the cloud. In April, legislation was introduced in Congress to authorize the Commerce Department to regulate remote access to U.S. technology, but it is unclear when it will be passed.

Chinese entities are also seeking access to Microsoft Corp.‘S MSFT cloud services. For example, Sichuan University builds generative AI platform and buys $40 million Microsoft Azure OpenAI tokens supporting the implementation of this project.

“AWS complies with all applicable U.S. laws, including trade regulations, regarding the provision of AWS services in China and elsewhere,” an Amazon cloud services spokesperson said, according to the report.

See also: What’s happening with Lucid Group stock on Tuesday?

Why does it matter:In early April, despite U.S. efforts to restrict high-tech sales to China, the country managed to acquire high-end Nvidia chips through third-party suppliers.

The chips were integrated with servers manufactured by Super Micro Computer Inc SMCI, Dell Technologies Inc VALLEYAND Gigabyte Technology Co. Ltd

China’s efforts to strengthen its integrated circuit sector also saw the country announce the creation of a new $47.5 billion public fund aimed at increasing the country’s independence in advanced integrated circuit manufacturing.

Meanwhile, Amazon has stepped up its efforts to acquire more sellers in China to expand its low-cost product offerings in the U.S. and other markets to compete with Chinese rivals such as PDD Holdings Inc‘S You, Alibaba Group Holding LimitedAND JD.com, Inc.

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This story was generated by Benzinga Neuro and edited by Kaustubh Bagalkote