Chinese AI Companies Dodge US Chip Curbs Flying Suitcases of Hard Drives Abroad (wsj.com) 19
An anonymous reader quotes a report from the Wall Street Journal: Since 2022, the U.S. has tightened the noose around the sale of high-end AI chips and other technology to China overnational-security concerns. Yet Chinese companies have made advances using workarounds. In some cases, Chinese AI developers have been able to substitute domestic chips for the American ones. Another workaround is to smuggle AI hardware into China through third countries. But people in the industry say that has become more difficult in recent months, in part because of U.S. pressure. That is pushing Chinese companies to try a further option: bringing their data outside China so they can use American AI chips in places such as Southeast Asia and the Middle East (source paywalled; alternative source). The maneuvers are testing the limits of U.S. restrictions. "This was something we were consistently concerned about," said Thea Kendler, who was in charge of export controls at the Commerce Department in the Biden administration, referring to Chinese companies remotely accessing advanced American AI chips. Layers of intermediaries typically separate the Chinese users of American AI chips from the U.S. companies -- led by Nvidia -- that make them. That leaves it opaque whether anyone is violating U.S. rules or guidance. [...]
At the Chinese AI developer, the Malaysia game plans take months of preparation, say people involved in them. Engineers decided it would be fastest to fly physical hard drives with data into the country, since transferring huge volumes of data over the internet could take months. Before traveling, the company's engineers in China spent more than eight weeks optimizing the data sets and adjusting the AI training program, knowing it would be hard to make major tweaks once the data was out of the country. The Chinese engineers had turned to the same Malaysian data center last July, working through a Singaporean subsidiary. As Nvidia and its vendors began to conduct stricter audits on the end users of AI chips, the Chinese company was asked by the Malaysian data center late last year to work through a Malaysian entity, which the companies thought might trigger less scrutiny.
The Chinese company registered an entity in Kuala Lumpur, Malaysia's capital, listing three Malaysian citizens as directors and an offshore holding company as its parent, according to a corporate registry document. To avoid raising suspicions at Malaysian customs, the Chinese engineers packed their hard drives into four different suitcases. Last year, they traveled with the hard drives bundled into one piece of luggage. They returned to China recently with the results -- several hundred gigabytes of data, including model parameters that guide the AI system's output. The procedure, while cumbersome, avoided having to bring hardware such as chips or servers into China. That is getting more difficult because authorities in Southeast Asia are cracking down on transshipments through the region into China.
At the Chinese AI developer, the Malaysia game plans take months of preparation, say people involved in them. Engineers decided it would be fastest to fly physical hard drives with data into the country, since transferring huge volumes of data over the internet could take months. Before traveling, the company's engineers in China spent more than eight weeks optimizing the data sets and adjusting the AI training program, knowing it would be hard to make major tweaks once the data was out of the country. The Chinese engineers had turned to the same Malaysian data center last July, working through a Singaporean subsidiary. As Nvidia and its vendors began to conduct stricter audits on the end users of AI chips, the Chinese company was asked by the Malaysian data center late last year to work through a Malaysian entity, which the companies thought might trigger less scrutiny.
The Chinese company registered an entity in Kuala Lumpur, Malaysia's capital, listing three Malaysian citizens as directors and an offshore holding company as its parent, according to a corporate registry document. To avoid raising suspicions at Malaysian customs, the Chinese engineers packed their hard drives into four different suitcases. Last year, they traveled with the hard drives bundled into one piece of luggage. They returned to China recently with the results -- several hundred gigabytes of data, including model parameters that guide the AI system's output. The procedure, while cumbersome, avoided having to bring hardware such as chips or servers into China. That is getting more difficult because authorities in Southeast Asia are cracking down on transshipments through the region into China.
How about (Score:2)
Terabyte MicroSD cards would be easier to hide...
Sneaking large amounts of Binary Data INTO China (Score:2)
Re: (Score:1, Interesting)
I'm fairly certain that sneaking data into China is still a threat to the Communist Party.
The people working on AI must know that the best chips for AI is not coming from within Communist China. They must also know that to keep up with competition from outside they have to also "copy their homework" by working quite diligently to sneak out suitcases full of hard drives from these nations.
This might work to keep the common citizen from learning about the outside world but if the common citizen is barred fro
Re: Sneaking large amounts of Binary Data INTO Chi (Score:5, Insightful)
Don't put China and North Korea into the same basket. Both claim to be communist, neither one is.
North Korea is a nightmarish totalitarian regime with hereditary succession. China is a state capitalism regime which can hardly be described as totalitarian anymore - there is a convergence in totalitarianism right now, between China and western states, where China becomes (slightly) less totalitarian and western states (with USA as a sad example) become more and more totalitarian.
The difference with western capitalism is how the elite is organized: in China, is organized as the "Communist Party" (with nothing communist in it), where the political power keeps the economic power under control (and reaping the benefits of course).
In the West, the elite is organized as a more complicated system of entanglement between economic and political power, and in some cases engulfs even Mafia-like power structures.
In both systems, if you don't have any power or money (who are interchangeable, like mater and energy in physics) you are fucked.
As for the Chinese not knowing anything about the outside world, maybe this is true for people living in remote rural places, but this is true for any country. There are millions of Chinese students and immigrants all over the world. Millions of Chinese tourists travel around the world (I see many of them in Athens). I even have a friend married to a Chinese who came in Greece as a student. Do you really believe that all these people are permitted to travel just because they are loyal members of the Communist Party?
I believe that as long as a Chinese citizen is not questioning the regime, is free to do as he/she likes. Much like non political people in western states, who are just minding their own work. But in China, and even in most western states, if you are marked as a "dissident", you are in trouble.
Re: (Score:2)
Re: Sneaking large amounts of Binary Data INTO Ch (Score:2)
"Don't put China and North Korea into the same basket. Both claim to be communist, neither one is."
Don't say they are the same, that's my job!
Never underestimate.... (Score:5, Insightful)
"Never underestimate the bandwidth of a station wagon full of tapes hurtling down the highway."
https://en.wikiquote.org/wiki/... [wikiquote.org]
LLM training as a service (Score:3)
Economically, LLM training as a service would make sense.
A box truck of computers with a truck of diesel powered electric generators could be a mobile LLM training as a service at costs much cheaper than owning, managing, depreciating, etc. a data center.
Need more processing power, bring in more trucks.
Re: LLM training as a service (Score:2)
It doesn't matter where the cluster is located, if you don't own it then you have the same issues with your data on someone else's systems. If you're going to load it into someone else's rolling DC, you might as well load it into someone's remote DC. Then nobody has to drive the DC around.
Bandwidth (Score:2)
Engineers decided it would be fastest to fly physical hard drives with data into the country, since transferring huge volumes of data over the internet could take months.
Andrew S. Tanenbaum's quote circa 1985:
Never underestimate the bandwidth of a station wagon full of tapes hurtling down the highway.
And the Obligatory XKCD [xkcd.com]
Re: (Score:2)
The bandwidth is fantastic! But the latency sucks.
Now we have a new problem... (Score:2)
Stupid (Score:1)
It's stupid to think that you can control information.
Chip export controls are easily circumvented and this story shows that you can't control their use.
The Chinese will soon have better chips and software than the US and they will have "all the cards".
Better for the US to just step up its game to out-compete... if it can.
return of the sneaker net to restriction bust? (Score:2)
return of the sneaker net to sanction bust?
If it's a few hundred gigs... are there no cloud solutions where the data can be accessed from both countries? I mean... there has to be a better way than putting a bunch of drives in luggage... especially if it's only a few hundred gigs... you can literally have an microSD card on your phone with 2 terabyte capacity.... or a laptop with even more... why in the hell would you put drives in suitcases??? that just screams look at me closer.
Surprised the diplomatic
Re: (Score:2)
The risk is probably pretty low in exporting items. Mostly things are checked on import. I wonder how they were caught (i.e. why someone made a story out of this). Did they get stopped at the border? Did they just brag once they got home? Did someone rat them out?
I assume these aren't stupid people so there is likely a good reason to use "hard drives" (which might not actually be hard drives... journalism today isn't that great). The phrase "packed" is rather loaded. It might just mean exactly what you sugg
whut? (Score:1)
Did AI write this headline?
Huh? Calculator? (Score:3)
I have dedicated 400Gb/s links all over 10 countries and 100Gb/s all over a bunch more. Pretty sure there are a few in China. I think it's typically costing me $25-30KUSD per fiber (8xwavelengths) per year on 25 year leases.
If you're in the game, you buy fiber. It costs nothing. And transferring to spinning rust at 150MB/s per drive and flying it is much slower and much less reliable. 7GB/s per sled for 64TB Huawei SSD is much better, but much more of a headache than just signing a lease for about the cost of one small NVidia DGX.
Of course, running a local farm of Huawei Ascend is just faster, cheaper and smarter.
Problem is, it's the NVidia software stack, not the chips that they want.