Security concerns rise as overseas units’ unrestricted access poses smuggling and remote access risks.
Efforts for tighter restrictions highlight the US struggle to sever China’s access to advanced AI and secure all export control breaches.
In the initial round of curbs, the Biden administration left overseas subsidiaries of Chinese companies with unfettered access to the same semiconductors, meaning they could easily be smuggled into China or accessed remotely by China-based users. The efforts to close the loophole show how the Biden administration is struggling to cut China off from top AI technology and how difficult it is to plug every gap in export controls.
While it would be illegal under US law to ship those AI chips to mainland China, it is very difficult for the United States to police those transactions, experts said, noting that China-based employees could legally access the chips located at foreign subsidiaries remotely as well. China’s AI capability depends on its access to US chips. CSET found in a June 2022 report that out of 97 individual AI chips procured via Chinese military tenders over an 8-month period in 2020, nearly all of them were designed by US-based companies Nvidia, Xilinx, Intel, and Microsemi.
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