Chinese state-linked entities are increasingly turning to cloud services from Amazon (NASDAQ:AMZN) and its rivals to access advanced U.S. chips and artificial intelligence (AI) capabilities, according to a report from Reuters on Friday.
Due to U.S. export restrictions, these entities cannot directly acquire high-end AI chips, but they can still access these technologies through cloud platforms.
A Reuters review of over 50 tender documents revealed that at least 11 Chinese entities sought access to restricted U.S. technologies via cloud services.
Four of these are reported to have explicitly mentioned Amazon Web Services (AWS), although they accessed it through Chinese intermediaries rather than directly from AWS.
The U.S. government has restricted exports of high-end AI chips to China, aiming to limit the Chinese military's capabilities.
However, providing access through the cloud does not violate current U.S. regulations.
AWS, which controls nearly a third of the global cloud infrastructure market, is one of the primary providers used by Chinese entities to gain access to powerful computing resources.
For example, Reuters said Shenzhen University spent approximately $28,000 on an AWS account to access cloud servers powered by Nvidia (NASDAQ:NVDA) chips, which are banned for export to China.
The U.S. government is now considering tightening regulations to close this loophole. Michael McCaul, chair of the U.S. House of Representatives Foreign Affairs Committee, told Reuters that this issue has been a concern for years and needs to be addressed.
The Biden administration is also working with Congress to strengthen existing controls to prevent Chinese companies from accessing advanced AI chips via cloud computing services, according to Reuters.