Banned Chinese firms are simply renting US cloud tech - and getting a pretty decent deal

Flags of the People's Republic of China, hanging in a park during National Day in Beijing, China
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In recent years, the US has added a growing number of Chinese firms to a list that prohibits them from doing certain types of business with the country.

Many of those sanctions include a ban on buying technology, but it seems that some Chinese companies have found a way around this though, by renting what they need, and it seems to be costing less than one would expect.

According to a recent Financial Times report, Chinese AI groups are using intermediaries and third parties to get access to US chips, rendering any sanctions against them pretty inefficient.

China avoids US bans

Targeted companies in China have been found to either be buying hardware through subsidiary companies or renting it through cloud providers.

According to the Financial Times, Chinese state-backed voice recognition company iFlytek has been renting Nvidia A100 GPUs, while Hong Kong-based facial recognition firm SenseTime has succeeded in buying banned tech through third parties.

The US’s sanctions don’t seem to have had an effect on pricing in China, either. Even with the workarounds, Chinese AI firms are getting good prices on the chips they need. The same report details one company charging $10 per hour for access to eight A100 chips, or about 86% of the price of AWS’s offering on P4D instances.

While the US is aware of such evasion routes, the current legislation does not cover cloud providers, highlighting a substantial loophole.

Even though it’s possible that the US may reconsider bans and plug such gaps, Chinese home-grown chips have become more advanced and sophisticated as the country has been forced to reduce reliance on other countries. As a result, US businesses that continue to benefit from Chinese usage may suffer.

Craig Hale

With several years’ experience freelancing in tech and automotive circles, Craig’s specific interests lie in technology that is designed to better our lives, including AI and ML, productivity aids, and smart fitness. He is also passionate about cars and the decarbonisation of personal transportation. As an avid bargain-hunter, you can be sure that any deal Craig finds is top value!