Chinese AI firms move to secure Nvidia chip capacity

Chinese AI companies have moved quickly to lease Nvidia-powered processor capacity outside the country, amid concerns that a spying scandal involving Nvidia CEO Jensen Huang could lead the U.S. to increase restrictions on chip access provided via cloud computing.

A major Chinese cloud provider is internally evaluating the prospect of locking in Nvidia chip capacity abroad, while smaller AI labs are considering similar measures, including discussions with providers in Southeast Asia. Companies fear that the controversy will provide political momentum for the Remote Access Security Act (RASA) bill currently on the agenda in the U.S., which could grant the Department of Commerce the authority to regulate remote access to restricted technology.

The process, which began with Jensen Huang's announcement that he had cheated on his wife, saw reports that Alice Huang, whose name was involved in the incident, was a former executive at the Singapore-based cloud computing company Megaspeed and was considered a Chinese intelligence asset by U.S. authorities. Megaspeed denies allegations that it helped Chinese customers access Nvidia chips subject to export restrictions.

Assessment: The possibility of the U.S. enforcing sanctions more strictly has increased demand for restricted Nvidia AI chips in China's gray market. This is leading traders to stockpile processors for fear that the U.S. will implement a broader crackdown on smuggling.