The Biden administration is reportedly considering closing a loophole that allows Chinese companies to access American artificial intelligence (AI) chips through overseas subsidiaries. The move comes as the United States seeks to tighten restrictions on shipments of AI chips and chipmaking tools to China in an effort to curb its military advancements. Currently, overseas subsidiaries of Chinese companies have unfettered access to the same semiconductors restricted by U.S. regulations, making it easy for these chips to be smuggled into China or accessed remotely by users based in China. The closure of this loophole highlights the challenges the Biden administration faces in cutting off China’s access to top AI technology and enforcing export controls effectively.
The efforts to close the loophole demonstrate the ongoing struggle to prevent Chinese companies from purchasing chips for use in data centers abroad. While it would be illegal to ship AI chips to mainland China, it is difficult for the United States to police these transactions, as China-based employees can legally access the chips located at foreign subsidiaries remotely. Experts highlight that the extent of this problem is unknown, but they acknowledge that China’s AI capability heavily relies on its access to U.S. chips. The United States has been actively working to close other loopholes that allow the entry of AI chips into China, such as restricting shipments to other regions beyond China. However, closing the loophole allowing Chinese parties to access U.S. cloud providers like Amazon Web Services poses a greater challenge for the U.S. government.
The Biden administration’s consideration of closing the loophole is a response to concerns over China’s access to American AI chips. As China’s military develops unmanned combat systems, its AI capability becomes increasingly vital. A significant number of AI chips used in China were found to have been designed by U.S.-based companies, underscoring China’s reliance on American contributions to its AI development. The United States has been actively working to halt the rise of China’s AI capabilities, but experts highlight that preventing access to AI chips remains a complex task. As the Biden administration aims to tighten restrictions on AI chip shipments to China, it must also address the challenges of enforcing regulations and preventing Chinese access to U.S. cloud providers offering AI capabilities.
