Chinese AI Firms Access Banned Nvidia Chips Through Southeast Asia Data Centers

The U.S. banned Nvidia's best chips from going to China. Now it's trying to close a crucial loophole

* Chinese AI firms are reportedly accessing advanced Nvidia computing power through data centers in Southeast Asia, despite U.S. restrictions on exporting the company's most advanced chips directly to the country. * This exploits a loophole in the U.S. export-control regime, which is more focused on the ownership of physical chips, not remote access to their computing power. * Lawmakers are considering giving the U.S. government authority to regulate remote cloud access to controlled technology -- but hurdles remain. In this article * NVDA Follow your favorite stocksCREATE FREE ACCOUNT Nvidia's effective monopoly over the most powerful chips has made U.S. export controls a key tool in Washington's effort to preserve its advantage over China in the AI race. But despite U.S. restrictions on exporting the company's most advanced semiconductors, including GB300s, several Chinese firms have reportedly been able to access the chips' compute power via data centers in Southeast Asia. Less than a week after Moonshot AI released a new model in July, White House official Michael Kratsios accused the company of using Nvidia's GB300 chips via a facility in Thailand. Moonshot's Kimi K3 is one of a wave of new Chinese AI models that have made leaps in performance in recent months, as the race for AI supremacy between Washington and Beijing intensifies. DeepSeek and Alibaba have also recently released new AI systems that have scored well on performance benchmarks. Industry watchers say access to advanced compute via overseas cloud providers is a key factor in Chinese AI models gaining capability. U.S. legislation is being discussed to plug this loophole, but hurdles remain before it can have an impact. How Chinese firms access Nvidia computing power overseas Nvidia's most advanced AI chips are under export restrictions to China, though some less capable semiconductors are allowed to be shipped to the country. Cassia King, senior researcher on the Compute Policy team at the Institute for AI Policy and Strategy, told CNBC that Moonshot's reported access to compute through a Thai facility was legal "so long as Moonshot isn't actually buying and owning the physical hardware directly." She said the U.S. export control regime "controls physical AI chips. It does not cover remote access to those chips." watch now VIDEO1:3901:39 Chinese AI firms' access to advanced Nvidia chips raises U.S. concerns Squawk Box Europe When asked about Chinese firms accessing Nvidia compute overseas to train AI models, a White House official told CNBC: "The Trump administration has implemented the most rigorous export control regime in modern history, and remains committed to safeguarding America's national and economic security." The U.S. Department of Commerce and Bureau of Industry and Security (BIS) did not respond to a request for comment. Chinese hyperscalers including ByteDance, Alibaba and Tencent have reportedly accessed compute power from Nvidia chips remotely via other Asian nations, including Thailand, Malaysia and Japan. ByteDance and Tencent did not respond to a request for comment. Alibaba declined to comment. ByteDance was working with Singapore-headquartered Aolani, a cloud provider with Nvidia chips, to access compute in Malaysia, according to a source familiar with the matter, who asked to remain anonymous when discussing private information. The Wall Street Journal first reported the arrangement in March. Aolani told CNBC it worked "with a global and diversified customer base spanning customers from North America and Asia." "The companies we service do not have ownership, potential future claim or physical access to the chips that power our solutions," the spokesperson added. "Any permitted access to our services, infrastructure or technology is fully compliant with all applicable regulations." AI infrastructure buildouts in Southeast Asia are booming as companies look to tap the growing market for advanced compute. Real estate company JLL estimates that global data center capacity could roughly double to 200GW by 2030. There are 31 planned 100MW+ data centers across Malaysia, Indonesia and Thailand, compared to just two today, according to data compiled by DC Byte. What the Remote Access Security Act would change Michelle Nie, a visiting fellow in technology and national security at think tank Center for a New American Security, told CNBC that loophole was "threatening U.S. national security." "The point of chip export controls is to deny China the ability to train frontier AI using advanced U.S. chips," she added. A proposed piece of legislation, the Remote Access Security Act (RASA), seeks to expand U.S. export controls to include the remote cloud-based access of critical hardware and software. It passed the House of Representatives in January but has yet to pass the Senate. It faces potential industry pushback, Nie said, adding: "Cloud providers would bear the compliance burden of any KYC and customer verification requirements mandated by the bill." The passing of RASA alone wouldn't solve the problem, Nie added, saying it would give the U.S. government "the authority to regulate remote access," but it "would still need to create a rule to export-control remote access to advanced chips." The Bureau of Industry and Security (BIS) could push through a rule quickly, possibly in a "matter of days" with White House support, said King. "The challenge will be in making a rule that's effective and enforceable," she added. "Policymakers will need to decide what compute is covered, who should be prohibited from remotely accessing the compute, and how to implement a robust know-your-customer scheme." 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Chinese AI firms accessing banned Nvidia chips via Southeast Asia

Moonshot AI, ByteDance, Alibaba, Tencent, and other Chinese AI firms have reportedly obtained access to restricted Nvidia $NVDA chip compute by routing through data centers located in Thailand, Malaysia, Japan, and other parts of Southeast Asia, according to CNBC. Cassia King, who works as a senior researcher in the Compute Policy group at the Institute for AI Policy and Strategy, said the arrangement complies with current rules. U.S. export controls govern the physical transfer of chips, not remote access to them. "It does not cover remote access to those chips," King said. White House Office of Science and Technology Policy Director Michael Kratsios accused Moonshot AI in July of accessing Nvidia GB300 chips through a facility in Thailand to train its Kimi K3 model, which the company says outperforms most rivals. The GB300 is part of Nvidia's Blackwell chip generation, which the U.S. prohibits from sale to Chinese companies. ByteDance was working with Singapore-headquartered Aolani, a cloud provider holding Nvidia chips, to access compute in Malaysia, according to CNBC, citing a source familiar with the matter. The Wall Street Journal first reported that arrangement in March. Aolani said its services are fully compliant with applicable regulations and that customers do not have ownership or physical access to its chips. Michelle Nie, a visiting fellow in technology and national security at the Center for a New American Security, described the loophole as "threatening U.S. national security," and argued that chip restrictions exist precisely to keep China from using cutting-edge American semiconductors to develop frontier AI systems. A proposed law called the Remote Access Security Act, or RASA, would bring remote cloud-based access to restricted chips and software within the reach of U.S. export control authority. Lawmakers approved it in the House in January, though the Senate has not yet acted on it. Nie cautioned RASA's passage alone would fall short of closing the loophole -- while it would establish the legal authority to regulate remote access, a separate rulemaking process would be required before that authority could actually be exercised over advanced chips. Cloud providers are also expected to push back on the compliance burden the bill would impose. King said that with backing from the White House, BIS could produce such a rule surprisingly fast -- potentially within days -- but cautioned that the harder task would be crafting something with real teeth, requiring decisions about which chips fall under the rule's scope and how to build a workable system for verifying customers. Demand for advanced compute capacity in Southeast Asia is growing. According to JLL, the real estate and infrastructure advisory firm, worldwide data center capacity may hit 200 gigawatts by 2030, approximately twice what exists today. DC Byte data shows the three countries of Malaysia, Indonesia, and Thailand together have 31 data centers of at least 100 megawatts in the pipeline, a sharp rise from the two facilities of that scale currently in operation.