The United States has recently implemented a ban on companies such as Nvidia from selling its most advanced AI chips to China starting in 2022. However, a report by Information reveals that Oracle has found a way around this restriction by allowing TikTok owner ByteDance to rent Nvidia’s H100 chips to train AI models on US soil. ByteDance is reportedly using US-based servers containing Nvidia chips to train AI models, despite concerns that the company may have ties to the Chinese government.
This practice, while technically permitted as Oracle is only renting the chips on US soil rather than selling them to China, goes against the spirit of the US government’s chip export regulations. The Biden Administration is concerned that China could use advanced AI for military, surveillance, or economic purposes, leading to bipartisan legislation passed in April forcing ByteDance to sell its US operations or face a ban. However, ByteDance is still in the process of closing a deal and is suing the US government, potentially delaying execution.
ByteDance’s Project Texas initiative, aimed at separating TikTok’s US operations from its Chinese leadership, is at the core of the deal with Oracle. However, former employees have suggested that this project may be mainly cosmetic, as they claim the US wing of ByteDance often collaborates closely with its Beijing-based leaders. Other Chinese companies, such as Alibaba and Tencent, are also reportedly seeking similar deals to access Nvidia’s coveted chips, which could be more challenging to hinder since they have their own US-based data centers.
While some US cloud providers have rejected offers to lease servers containing Nvidia’s chips to Chinese companies due to concerns about violating the spirit of American chip restrictions, Oracle has been more willing to take advantage of technically legal solutions for profit. The US Department of Commerce has proposed a rule that would require US cloud providers to verify the identities of foreign customers and report any training of AI models that could be used in malicious cyber activities, but the proposal has faced opposition from cloud providers.
Even if the Commerce Department successfully closes the loophole, Chinese cloud providers like Tencent and Alibaba could still purchase Nvidia chips and train AI models in their US-based data centers, presenting a challenge for US authorities. The ongoing battle between business and defense interests related to these practices will require careful examination and consideration in the future.
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https://www.engadget.com/tiktoks-ai-efforts-reportedly-exploit-loopholes-to-use-premium-nvidia-chips-173432988.html