Tag Archives: export controls technology

The Cat-and-Mouse Game: US-China, Chip Giants

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The U.S. on March 28 2025 added dozens of Chinese companies to a trade blacklist over national security concerns. American businesses seeking to sell technology to these companies will need approval from the government. Among those added were subsidiaries of Inspur Group, China’s largest server maker and a major customer for U.S. chip makers such as Nvidia, Intel and Advanced Micro Devices. Companies linked to China’s largest supercomputer maker, Sugon, were also added…

Nearly 80 companies were put on the Commerce Department’s blacklist, known as the entity list…including the U.S. server maker Aivres Systems that is wholly owned by Inspur Electronic. The latter is one-third owned by Inspur Group, according to corporate records. Aivres has been assembling high-end artificial-intelligence equipment for Nvidia. The AI-chip giant has said that Aivres will make servers using chips in the Blackwell family, Nvidia’s newest and most powerful processors.  Aivres advertises on its website that it sells servers and infrastructure powered by Blackwell chips, which are banned from sale into China…About two months after Inspur Group was added to the trade blacklist in March 2023, California-based Inspur Systems changed its name to Aivres Systems.

Excerpts from Liza Lin, Trump Takes Tough Approach to Choking Off China’s Access to U.S. Tech, WSJ, Mar. 26, 2025

US-China Locked in Perpetual Cat and Mouse Game

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Chinese artificial-intelligence developers have found a way to use the most advanced American chips without bringing them to China. They are working with brokers to access computing power overseas, sometimes masking their identity using techniques from the cryptocurrency world. The tactic comes in response to U.S. export controls that have prevented Chinese companies from directly importing sought after AI chips developed by U.S.-based Nvidia. While it is still possible for Chinese users to physically bring Nvidia’s chips to China by tapping a network of gray-market sellers, the process is cumbersome and can’t supply all the needs of big users.

One entrepreneur helping Chinese companies overcome the hurdles is Derek Aw, a former bitcoin miner. He persuaded investors in Dubai and the U.S. to fund the purchase of AI servers housing Nvidia’s powerful H100 chips. In June 2024, Aw’s company loaded more than 300 servers with the chips into a data center in Brisbane, Australia. Three weeks later, the servers began processing AI algorithms for a company in Beijing. “There is demand. There is profit. Naturally someone will provide the supply,” Aw said.

Renting far away computing power is nothing new, and many global companies shuffle data around the world using U.S. companies’ services such as Google Cloud, Microsoft Azure and Amazon Web Services. However, those companies, like banks, have “Know Your Customer” policies that may make it difficult for some Chinese customers to obtain the most advanced computing power.

The buyers and sellers of computing power and the middlemen connecting them aren’t breaking any laws, lawyers familiar with U.S. sanctions say. Washington has targeted exports of advanced chips, equipment and technology, but cloud companies say the export rules don’t restrict Chinese companies or their foreign affiliates from accessing U.S. cloud services using Nvidia chips. The Commerce Department in January 2014 proposed a rule that seeks to prevent malicious foreign entities from using U.S. cloud computing services for activities including training large AI models. U.S. cloud companies argue that the rule won’t prevent abuse and could instead undermine customer trust and weaken their competitiveness.

In platforms used by Aw and others, the billing and payment methods are designed to give the participants a high degree of anonymity. Buyers and sellers of computing power use a “smart contract” in which the terms are set in a publicly accessible digital record book. The parties to the contract are identified only by a series of letters and numbers and the buyer pays with cryptocurrency. The process extends the anonymity of cryptocurrency to the contract itself, with both using the digital record-keeping technology known as blockchain. Aw said even he might not know the real identity of the buyer. As a further mask, he and others said Chinese AI companies often make transactions through subsidiaries in Singapore or elsewhere.

The service of selling scattered computing power is called a decentralized GPU model.

Excerpts from Raffaele Huang, China’s AI Engineers Are Secretly Accessing Banned Nvidia Chips, WSJ, Aug. 26, 2024

The US-China Supercomputer Rivalry

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For decades, American and Chinese scientists collaborated on supercomputers, tennis-court-size machines essential to improving artificial intelligence, developing vaccines and predicting hurricanes. But Chinese scientists have become more secretive as the U.S. has tried to hinder China’s technological progress, and they have stopped participating altogether in a prominent international supercomputing forum.

The new secrecy also makes it harder for the U.S. government to answer a question it deems essential to national security: Does the U.S. or China have faster supercomputers? Some academics have taken it upon themselves to hunt for clues about China’s supercomputing progress, scrutinizing research papers and cornering Chinese peers at conferences.

Supercomputers have become central to the U.S.-China technological Cold War because the country with the faster supercomputers can also hold an advantage in developing nuclear weapons and other military technology. “If the other guy can use a supercomputer to simulate and develop a fighter jet or weapon 20% or even 1% better than yours in terms of range, speed and accuracy, it’s going to target you first, and then it’s checkmate,” said Jimmy Goodrich, a senior adviser for technology analysis to Rand Corp., a think tank.

The forum that China recently stopped participating in is called the Top500, which ranks the world’s 500 fastest supercomputers. While the latest ranking, released in June 2024, says the world’s three fastest computers are in the U.S., the reality is probably different. Officially, the fastest computer on the Top500 sits at the Energy Department-sponsored Oak Ridge National Laboratory, in Tennessee. Called Frontier, it is about the size of two tennis courts, cost $600 million to construct and has an electricity bill of about $20 million a year, said Dongarra, who also works at Oak Ridge. It uses tens of thousands of computer chips.

Dongarra doesn’t think Frontier is actually the world’s fastest supercomputer. Scientific papers suggest that certain Chinese machines are better. One has been referred to in state media as a prototype Tianhe-3, after a Chinese term for the Milky Way galaxy, while the other is a model in the Sunway series of supercomputers.

Excerpts from Stu Woo ,US China Rift Hits Supercomputer Ties, WSJ, July 24, 2024