Advanced Nvidia Corp computer chips suitable for emerging artificial intelligence (AI) applications have found their way into Chinese military hands despite extensive tech blockades by US officials, an investigation by The New York Times has revealed.
The investigation confirmed there is an active trade in AI technology in China, representing a global grey and black-market effort to aid China in circumventing US trade restrictions.
The US masthead interviewed current and former US officials, executives and industry analysists, and reviewed corporate records and visits to companies in Beijing, Kunshan and Shenzhen in the course of its investigation.
Sanctions can’t keep up
There is also strong evidence that Chinese companies are attempting to bypass sanctions with the use of fresh shell companies, set up to obtain as much advanced technology as possible before US officials can catch up to add them to the sanction list.
Executives from banned Chinese company Sugon moved quickly to set up a new firm, Nettrix, which is already legally trading with Nvidia, Intel Corp (NASDAQ:INTC) and Microsoft Corp (NASDAQ:MSFT) and has become one of the largest manufacturers of Chinese AI servers in just six months.
The US legal apparatus simply can’t move quickly enough to keep up.
It’s not just Chinese companies working to circumvent sanctions either – Nvidia is establishing a new line of AI chips for the Chinese market alongside Inspur, one of its major distributors in China.
The company would seek to ensure the Blackwell series 'B20' chips don’t fall under current US trade restrictions but are suitable for AI applications.
It remains to be seen how the US Administration will respond to these side steps, which may obey the letter of the new laws but certainly not the spirit.