U.S. House passes bill to close cloud chip export loophole used by Chinese companies

U.S. House Passes Remote Access Security Act to Block Cloud Computing Loophole

The U.S. House of Representatives has passed the Remote Access Security Act with an overwhelming 369-22 bipartisan vote, marking a significant shift in how the country regulates accessing American AI chips 2

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. The legislation extends export controls to the cloud, effectively treating remote access to high-end US GPUs and other export-controlled hardware as subject to the same restrictions that govern physical chip sales 1

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. The bill modernizes the Export Control Reform Act by expanding federal authority to restrict foreign adversaries' ability to access technologies remotely through cloud services 1

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Chinese Companies Exploited Offshore Cloud Computing Rentals

The cloud chip export loophole became apparent in November last year when multiple reports revealed that Chinese companies were circumventing restrictions by renting data centers in Southeast Asia. According to a Wall Street Journal investigation, INF Tech, a Shanghai-based startup, allegedly gained access to 2,300 banned Nvidia GPUs by renting a server in Indonesia 1

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. The company rented 32 Nvidia GB200 servers from an Indonesian telecommunications company in a deal valued at approximately $100 million 1

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. Similarly, both Alibaba and ByteDance were accused of training their respective Qwen and Doubao language models using Nvidia chips accessed through cloud services hosted in the region 1

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Cloud Services Became a Workaround for Export Restrictions

Chinese companies have been acquiring remote access to high-end US GPUs through platforms like Amazon Web Services since at least 2023 2

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. Cloud providers such as Alibaba and Tencent may have enabled access to export-controlled GPUs for China-based customers by renting cloud compute hardware hosted outside the country 2

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. Meanwhile, Microsoft and Amazon Web Services reportedly operate in China via local partners that offer cloud services broadly similar to those available elsewhere 2

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. Bill sponsor Representative Mike Lawler stated, "Our export controls are only as strong as the weakest link, and right now, the CCP has a real tool to sidestep these prohibitions" 2

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National Security Concerns Drive Legislative Action

Chairman John Moolenaar, who cosponsored the legislation, emphasized the national security implications of the loophole. "The CCP's AI ambitions are being fueled by its access to American chips housed in data centers located outside of China," he stated 1

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. He added that the bill "brings our laws into the digital age and makes it clear that cloud compute is subject to U.S. export control law, just like physical chips" 2

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. The legislation aims to strengthen national security and protect American innovation by closing what lawmakers view as a critical vulnerability in existing regulations 1

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Complex Landscape of AI Chip Exports and Future Implications

The AI chip export landscape remains fluid, with Washington attempting to balance restrictions while selectively relaxing some controls. The Trump administration recently approved the sale of Nvidia H200 chips to approved customers in China, though Beijing has yet to approve imports 1

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. However, more powerful Blackwell-based chips and Nvidia's new Vera Rubin architecture remain firmly off limits 1

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. Meanwhile, China has been pushing its own chip companies to develop competitive alternatives and ditch American imports over national security concerns, a process that may still take time 2

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. The bill now awaits passage through the Senate and a signature from President Trump, though their positions on the legislation remain unclear 2

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