Despite US sanctions, how did Chinese firm ByteDance get access to NVIDIA's AI chips?
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Key notes
- US banned selling advanced AI chips directly to China.
- ByteDance leases these chips from US cloud providers to train AI for TikTok.
- This loophole in US export controls allows Chinese firms to access the tech.
Chinese tech giant ByteDance, known for TikTok, has been avoiding US sanctions on Nvidia’s advanced AI chips. The US government restricts direct sales of these chips to China due to national security concerns. However, ByteDance has found a loophole: leasing the chips from cloud service providers based in the United States.
This workaround exploits a gap in US export controls. While the regulations aim to limit China’s access to new AI technology, they don’t restrict Chinese companies from using these technologies within the US itself. ByteDance reportedly leases Nvidia’s high-end AI chips from Oracle, a US cloud provider, to fulfill its AI computing needs for TikTok’s US operations.
This isn’t an isolated case. Other Chinese tech firms like Alibaba and Tencent have reportedly explored similar arrangements with US cloud providers to gain access to these advanced chips.
Analysts believe this trend might prompt the US to review its export regulations. The current approach allows Chinese companies to access advanced AI capabilities while restricting direct sales. This could incentivize China to develop its own domestic alternatives.
Nvidia, which now is the second most valuable company after taking Apple’s spot, on the other hand, is reportedly acquiring startups focused on AI chip cost-efficiency, likely a strategic move to stay competitive amidst these changing dynamics.
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