The US government has been putting extensive efforts into limiting the technological advance of Chinese companies and research organizations for more than three years. Their primary focus has been on export restrictions targeting graphics processing units (GPUs) from leading companies like NVIDIA and AMD . The Department of Commerce has been the key body implementing these restrictions, serving as the enforcement arm of the administration’s technological containment strategy.
Despite these substantial efforts, cutting-edge chips for artificial intelligence (AI) have continued to make their way into China, albeit in smaller quantities than what organizations focused on developing large AI models actually require. Many of these chips are being acquired through secondary markets and parallel import routes in countries such as India , Malaysia , and Singapore , where US regulatory power remains limited.
NVIDIA has managed to obtain an export license to sell its GPUs for AI, specifically the H20 model. However, the Chinese government has swiftly vetoed its use. The Cyberspace Administration of China is reportedly conducting a comprehensive investigation into this GPU, suspecting that it contains a backdoor that could be exploited by Chinese experts. This suspicion raises concerns regarding China’s ability to effectively utilize this technology without compromising security.
China is acquiring top Nvidia GPUs through secondary markets
In response to these restrictions, China has developed three notable alternatives to NVIDIA: Cambricon Technologies , Huawei , and Moore Threads . These Chinese chip designers have strategically positioned themselves to contend with NVIDIA’s market stronghold in China. Notably, many developers engaged in large AI projects that require CUDA technology still depend on NVIDIA chips due to their high performance and effectiveness. According to a report by Digitimes Asia, a significant number of these GPUs are being sourced from the international second-hand market .
<img alt="Universal quantum computers are closer thanks to this unexpected discovery" width="375" height="142" src="https://i.blogs.es/4c4247/ising-ap/375_142.jpeg"/>Interestingly, Chinese firms are not just limited to acquiring the H20 chips , which have been prohibited. Instead, they are procuring more advanced GPUs, specifically the H100 and A100 , both of which are more powerful than H20 . The US faces significant challenges in regulating the second-hand market and tracking these parallel import routes. Consequently, the Department of Commerce is considering a novel strategy that involves introducing technology capable of tracking these chips throughout their journey.
Chinese companies are securing large quantities of NVIDIA A100 and H100 in the second-hand market
One proposed solution involves a form of geolocation technology that would identify the location of each integrated circuit from the moment it leaves the semiconductor factory to its eventual destination. Michael Kratsios, director of the Office of Scientific and Technological Policy at the White House, has confirmed that discussions are underway to implement both hardware and software tracking solutions in the chips themselves. “We are exploring ways to improve the tracking of their location,” Kratsios stated, indicating the urgency of addressing this issue.
The US administration remains steadfast in its commitment to maintaining leadership in the AI hardware development sector as global adoption of AI technology accelerates. Nevertheless, the implementation of the proposed solutions poses significant technical challenges . Constant f GPS tracking is impractical for this context, according to Kratsios. Thus, one potential alternative is to embed logic within each chip to periodically confirm its location, thereby reducing reliance on external networks.
This design, however, increases the complexity of each chip and could negatively impact performance, affecting productivity in data centers. Moreover, increased chip costs and the risk of hackers exploiting any vulnerabilities in the tracking logic present additional complications for this approach.
Image | Nvidia
More information | Digitimes Asia
In Xataka | The US will not be able to contain the technological development of China. Experts from the chips industry forecast it.