Key facts
- Chinese tech giants Alibaba, Baidu, and Tencent, listed on a U.S. military blacklist, are acquiring advanced U.S. AI chips and services.
- These acquisitions are facilitated through Singapore-based subsidiaries, bypassing U.S. export controls that restrict direct sales to mainland China.
- Companies like Nvidia, OpenAI, and Google are involved in these sales, with OpenAI and Google confirming AI service provision to these subsidiaries.
- U.S. export controls currently focus on named entities and locations, creating loopholes that allow blacklisted firms to access technology via third countries.
- OpenAI has reported suspected model distillation by Alibaba-linked users to the U.S. government, while Anthropic has accused Chinese labs of similar practices and is challenging Alibaba's access.
- Alibaba disputes its inclusion on the U.S. military blacklist and is pursuing legal action to be removed.
Chinese technology giants, including Alibaba, Baidu, and Tencent, which are on a U.S. military blacklist, are reportedly continuing to acquire advanced artificial intelligence chips and services from American companies. This is being achieved by routing purchases through subsidiaries registered in Singapore, a jurisdiction not subject to the same U.S. export controls.
Nvidia's high-end AI chips and advanced AI services from OpenAI and Google are allegedly being supplied to these Chinese firms via their Singaporean entities. While U.S. regulations aim to prevent the Chinese military from accessing cutting-edge technology, the current rules focus on named entities and geographic locations, creating a loophole that allows blacklisted companies to circumvent restrictions.
OpenAI has confirmed providing AI services to these subsidiaries but stated it blocks direct access from mainland China and monitors for misuse. The company recently suspended API access for some Alibaba-linked users after detecting suspected 'distillation,' where a leading model's outputs are used to train a rival system, and reported this activity to the U.S. government.
Anthropic, another AI firm, has taken a more stringent approach, barring Chinese companies and their foreign-owned entities from its frontier models. The company has accused Chinese labs, including DeepSeek, Moonshot, and MiniMax, of distillation and believes Alibaba created a large number of fake accounts to interact with its Claude model, violating its terms of service.
Alibaba has rejected the premise of its inclusion on the U.S. military blacklist, describing the designation as 'arbitrary and capricious' and is seeking to have it removed through a U.S. court. Baidu declined to comment, while Tencent and Alibaba did not respond to specific questions from the Financial Times.