Chinese companies unable to get hold of advanced artificial intelligence chips because of US sanctions have been able to buy or rent access to them by using them on US soil.

The loophole was first reported by The Information, which said ByteDance, the Chinese owner of TikTok, has been renting Nvidia’s best chips from Oracle for AI computing.

– Sebastian Moss

Citing two people with knowledge of the situation, the news outlet also said that China Telecom had also sought to establish a similar arrangement with other cloud providers. Meanwhile, a separate source said Chinese cloud providers Alibaba and Tencent have reportedly held discussions with Nvidia about the possibility of setting up data centers in the US to obtain access to the chips.

The Information also reported that two, unnamed smaller cloud companies in the US had declined to rent Nvidia H100 chips because it ‘seemed to go against the spirit’ of US chip sanctions.

In a request for comment from The Information, a spokesperson for Nvidia said it supports “new AI data centers in the US” but did not address the allegations that the company has been in discussions with Chinese cloud providers, or that ByteDance had been accessing the company’s chips through Oracle.

DCD has reached out to Nvidia with its own request for comment.

China is currently unable to legally purchase advanced semiconductor technology from abroad due to wide-ranging sanctions that have been put in place by the US government.

Earlier this year, it was reported that despite the export ban, research institutions and universities in China, including the Chinese Academy of Sciences, the Shandong Artificial Intelligence Institute, a state-run aviation research center, and a space science center, had managed to obtain high-end Nvidia AI chips through Chinese resellers.

Chinese companies have also reportedly sought to power AI hardware by repurposing Nvidia gaming chips by installing their core components onto new circuit boards.

The Department of Justice is set to open an antitrust investigation into Nvidia, looking into the company’s influence on the artificial intelligence (AI) industry.

The investigation will relate to allegations that in the face of limited GPU supply, Nvidia has been able to control which companies receive its chip orders first. The company has also been accused of giving preferential treatment to businesses it has invested in, offering support to smaller cloud companies that are not developing their own chips to rival Nvidia.