Chinese biz banned from buying US tech rent it instead

Chinese companies named by the US as prohibited from acquiring certain technologies are reportedly renting them instead from local cloud providers.

The Financial Times reports (paywalled) that prohibited companies easily circumvent bans as Chinese clouds happily rent their hardware. Also, that Nvidia's A100 GPUs are seeing high demand from local AI outfits that can't buy their own.

Some Chinese clouds, the organ adds, have seen customers whose identities are masked by shell companies sign up for rented GPUs. Such customers are often AI businesses – a field in which the inability to access GPUs, or being forced to use older products, can be a severe impediment to success.

The FT mentions one Chinese cloud that charges $10 an hour for access to eight Nvidia A 100 tensor core GPUs – which is actually a decent price! Amazon Web Services lists its P4D instances as offering eight of the GPUs at prices from $11.57 an hour for customers willing to make a three-year commitment. On-demand prices start at $32.77 an hour.

Maybe Chinese clouds' servers can't match other aspects of Amazon's boxes. There has to be a catch.

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The US is already aware of what officials describe as "evasion routes" used to circumvent some of its sanctions. Remarks on such routes The Register has heard focussed on shipments of physical product.

There's no reason the US could not also consider clouds and other service providers as potential providers of evasion routes.

If big Chinese clouds are found to be offering banned silicon to local customers, the US has obvious leverage: both Alibaba Cloud and Tencent Cloud have US-based regions. Action against Alibaba's e-commerce operations could be another option. Adding Chinese clouds to lists of sanctioned entities is yet another.

The Register relishes the prospect of reporting on how the Land of the Free would respond if big US-based clouds' Chinese presences are found renting kit to banned companies. China does not allow AWS or Microsoft to operate independently within its borders – each has partners that operate their clouds, but offer all-but-identical services to those offered elsewhere. That separation could be a decisive factor if Azure or AWS rent the wrong kit to banned Chinese companies.

But Uncle Sam would find it harder to act against the many clouds that operate only within China. Tracking gray market sales to all those small clouds would also be challenging.

The US bans have also proven a sticking point with allies. South Korea, for instance politely complains that its chipmakers invested in China long before such sanctions were imposed, but now face the prospect of not being able to operate profitably in the Middle Kingdom.

The Biden administration's CHIPS Act offers incentives for chipmakers to move manufacturing stateside, but also includes requirements to share extensive technological information and even profits if semiconductor profits spike. ®