The US has banned firms like Nvidia from promoting their most superior AI chips to China since 2022. But when loopholes exist, profit-hungry firms will discover and exploit them. The Info printed a bombshell report on Thursday detailing how Oracle permits TikTok proprietor ByteDance to lease Nvidia’s most superior chips to coach AI fashions on US soil.
ByteDance, which many US lawmakers imagine has direct ties to the Chinese language authorities, is reportedly renting US-based servers containing Nvidia’s coveted H100 chips from US cloud computing firm Oracle to coach AI fashions. The observe, which runs towards the spirit of the US authorities’s chip rules, is technically allowed as a result of Oracle is merely renting out the chips on American soil, not promoting them to firms in China.
The US authorities has cracked down on exporting the chips to China as an extension of the tensions between the 2 nations. The Biden Administration fears the nation may use superior AI for army or surveillance functions or to realize an financial higher hand. The US authorities handed bipartisan laws in April that may drive ByteDance to both promote its US operations or face a ban. However ByteDance nonetheless has till early subsequent yr to shut a deal, and it’s suing the US authorities, which may delay enforcement.
Though ByteDance is coaching its fashions within the US, “it could be difficult to stop them from sending the models they produced back to their headquarters in China,” based on US-based cloud suppliers and a former Nvidia worker who spoke to The Info. Fairly the loophole, certainly.
ByteDance’s Undertaking Texas initiative, which the corporate claims siloes off TikTok’s US operations from its Chinese language management to allay US fears, is on the coronary heart of the association. Nevertheless, former ByteDance workers have described Undertaking Texas as “largely cosmetic,” as they declare the corporate’s US wing usually works carefully with its Beijing-based management.
ByteDance isn’t the one Chinese language firm trying to sport the principles. The Info says Alibaba and Tencent are discussing related preparations to realize entry to the sought-after chips. These offers might be more durable to squash as a result of they’ve their very own US-based information facilities and wouldn’t need to lease servers from American firms.
Not each firm has been as prepared as Oracle to skirt the regulation’s intent. “Two small American cloud providers” reportedly turned down gives to lease servers with Nvidia’s H100 chips to ByteDance and China Telecom as a result of “they seemed to go against the spirit of U.S. chip restrictions.” Nevertheless, Oracle, cofounded by American businessman Larry Ellison and run by present CEO Safra Catz, apparently discovered the chance for revenue by technically authorized workarounds too tempting to go up.
The US Commerce Division, the bureau that might shut the loophole, might already concentrate on the practices. Earlier this yr, the division proposed a rule that might require US cloud suppliers to confirm overseas clients’ identities and notify the US if any of them have been coaching AI fashions that “could be used in malicious cyber-enabled activity.” Nevertheless, the Commerce Division just lately mentioned most cloud suppliers disapproved of the proposal, claiming “the burden of additional requirements might outweigh the intended benefit.” Within the meantime, the proposed rule, which may theoretically plug the loophole, stays in limbo.
However even when the US manages to close down that exploit, The Info says it wouldn’t cowl Chinese language cloud suppliers like Tencent and Alibaba from shopping for Nvidia’s chips and utilizing them to coach AI fashions in their very own US-based information facilities. The Commerce Division can have its fingers full figuring this one out as enterprise and protection pursuits wrestle for management.
