According to reports, some Chinese AI companies have found ways to circumvent US export restrictions on advanced NVIDIA (NVDA, Financial) chips. These companies transfer massive amounts of data to Malaysia using hard drives carried by personnel, facilitating AI model training remotely. This strategy has been used to continue AI research despite limitations on importing advanced training hardware.
Four Chinese tech specialists reportedly traveled to Kuala Lumpur with a total of 60 hard drives, each storing approximately 80TB of data—enough to support multiple large language models. These drives were cleverly distributed among their luggage to avoid detection by Malaysian customs and immigration checks.
Initially, these companies leased servers through subsidiaries registered in Singapore, but with tightened regulations there, Malaysia required Chinese entities to register locally for server leasing. Thus, these teams moved operations to Malaysia, renting about 300 NVIDIA AI servers to handle their data processing needs. Despite NVIDIA's assertion that there's no evidence of illegal chip transfers, a black market for NVIDIA chips persists in China.
The challenges in enforcing US export restrictions have led some Chinese firms to outsource data training offshore, minimizing hardware constraint impacts. However, existing control measures remain limited in effectiveness, facing significant enforcement challenges.
