Exclusive-Chinese entities turn to Amazon cloud and its rivals to access high-end US chips, AI By Reuters

By Eduardo Baptista, Fanny Botkin and Karen Freifeld

BEIJING/SINGAPORE/NEW YORK (Reuters) – Chinese state-linked entities are using cloud services provided by Amazon.com Inc or its rivals to access advanced U.S. chips and artificial intelligence capabilities they could not otherwise obtain, recent public tender documents show.

The US government has restricted the export of advanced 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 through the cloud does not violate US regulations, as only exports or transfers of goods, software or technology are regulated.

A Reuters review of more than 50 bidding documents posted over the past year on publicly available Chinese databases showed that at least 11 Chinese entities sought access to restricted U.S. technologies or cloud services.

Of these companies, four explicitly referred to Amazon Web Services (AWS) as their cloud service provider, even though they obtained services through Chinese intermediaries and not directly from AWS.

The bidding documents, first reported by Reuters, show the breadth of strategies Chinese entities are using to secure advanced computing power and access to generative AI models, and highlight how U.S. companies are tapping into 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,” an Amazon Cloud Computing spokesperson said.

According to research firm Canalys, AWS controls nearly a third of the global cloud infrastructure market. In China, AWS is the sixth-largest cloud provider, according to research firm IDC.

Shenzhen University spent 200,000 yuan ($27,996) on an AWS account to gain access to cloud servers powered by Nvidia (NASDAQ:) A100 and H100 chips for an unspecified project, according to a March bidding document. The document showed it obtained the service through a middleman, Yunda Technology Ltd Co.

The US has banned the export to China of two Nvidia chips that are used to power large language models (LLMs) like 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 any of the deals struck by other Chinese entities.

Zhejiang Lab, a research institute developing its own master of law program, GeoGPT, said in a tender document in April that it plans to spend 184,000 yuan to purchase cloud computing services from AWS because its AI model cannot get enough computing power from domestic companies. alibaba (New York Stock Exchange:).

A Zhejiang Lab spokesperson said the company had not finalized the purchase, but did not respond to questions about the reasons behind the decision or how it would meet LLM’s computing power requirements. Alibaba’s cloud computing unit, Alicloud, did not respond to a request for comment.

Reuters could not confirm whether the purchase had been made or not.

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

“This vulnerability has been a concern of mine for years, and we have needed to address it for a long time,” House Foreign Affairs Committee Chairman Michael McCaul said in a statement to Reuters, referring to remote access to advanced U.S. computing through the cloud by foreign entities.

A bill was introduced in Congress in April to empower the Commerce Department to regulate remote access to U.S. technology, but it is not clear if and when it will pass.

A department spokesperson said it is working closely with Congress and “seeking additional resources to strengthen our existing controls that prevent PRC companies from accessing advanced AI chips through remote access to cloud computing capacity.”

The Commerce Department also proposed a rule in January that would require U.S. cloud computing services to verify and report to regulators when users of large AI models use U.S. cloud computing services to train large AI models capable of “malicious cyber activity.”

The rule, which has not yet been finalized, also allows the Commerce Secretary to impose a ban on customers.

“We understand that the Department of Commerce is considering new regulations, and we comply with all applicable laws in the countries where we operate,” an Amazon Web Services spokesperson said.

Demand for Cloud Computing in China

Chinese entities are also seeking access to Microsoft’s (NASDAQ:) 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 project. The university’s procurement document released 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-based Xudong Technology Co. did not respond to requests for comment on the purchase.

OpenAI said in a statement that its services are not supported in China and that Azure OpenAI operates under Microsoft policies. The company did not comment on the bids.

The University of Science and Technology of China said in a tender document in March that it wanted to lease 500 cloud servers, each equipped with eight Nvidia A100 chips, for an unspecified purpose.

A procurement document in April showed that Hefei Advanced Computing Center Option Management Co Ltd was the tenderer, but the document did not name the cloud 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 obtaining U.S. quantum computing technology that could help China’s military and for helping develop its nuclear program.

The University of Science and Technology and the Hefei Advanced Computing Center did not respond to requests for comment.

Beyond the Boundary AI Chips

Amazon offered Chinese organizations access not only to advanced AI chips but also to advanced AI models like Anthropic’s Claude that they wouldn’t otherwise have access to, according to public postings, bids and marketing materials reviewed by Reuters.

“Bedrock offers a selection of leading LLM programs including prominent closed-source models such as Anthropic’s Claude 3,” Zhou Ruisong, president of AWS Greater China, said at a generative AI 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 experiment with “world-class AI models” and mentioned Chinese gaming company Source Technology as one of its customers using Claude.

Amazon has dedicated sales teams to serve Chinese customers domestically and internationally, according to former company executives.

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

“Amazon Bedrock customers are subject to Anthropic’s End User License Agreement, which prohibits access to Claude in China via Amazon’s Bedrock API and via Anthropic’s API,” an AWS spokesperson said.

Anthropic said it does not support or allow customers or end users within China to access the Cloud app.

However, affiliates or product divisions of companies headquartered in China may use the Claude app if the affiliate itself is located in a supported region outside of China,” an Anthropic spokesperson said.

Source Technology did not respond to a request for comment.

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