Chinese AI developers are finding innovative ways to circumvent US export controls on advanced chips by leveraging foreign computing resources. The strategy allows them to access high-performance chips, such as Nvidia’s A100 and H100, which are restricted under US regulations. As the demand for AI capabilities grows, these developers employ various methods to remain competitive in the tech landscape.
One key approach is using cloud computing services from major American providers like Amazon Web Services (AWS) and Microsoft Azure. This method is legally permissible under current US regulations, which focus on directly exporting physical technologies rather than cloud-based computing power.
Additionally, Chinese AI developers are collaborating with brokers and using identity-mapping techniques from the cryptocurrency industry. These brokers help facilitate access to AI servers in countries like Australia, allowing companies to deploy advanced chips without importing them directly into China. For example, entrepreneur Derek Aw has arranged for over 300 servers equipped with Nvidia’s H100 chips to be housed in Australia and utilised by firms in Beijing.
Despite the challenges posed by export controls, many Chinese companies have stockpiled chips and invested in domestic semiconductor manufacturing. While local suppliers often need to catch up to US technologies, this dual approach helps maintain momentum in AI research and development. Legal experts note that as long as technology is not used for military purposes, cloud services to access advanced computing power remain unregulated, highlighting the complexities of enforcing technology trade restrictions.
The ongoing situation illustrates the US government’s challenges in enforcing its trade policies. As Chinese companies continue to adapt and innovate, the US may need to tighten regulations to address emerging loopholes.
FuriosaAI has launched its latest AI inference chip, RNGD, which promises to be a significant accelerator for data centres handling large language models (LLMs) and multimodal model inference. Founded in 2017 by former AMD, Qualcomm, and Samsung engineers, FuriosaAI has rapidly developed cutting-edge technology, culminating in the RNGD chip.
The RNGD chip, developed with the support of TSMC, has demonstrated impressive performance in early tests, particularly with models such as GPT-J and Llama 3.1. The chip’s architecture, featuring a Tensor Contraction Processor (TCP) and 48GB of HBM3 memory, delivers high efficiency and programmability, achieving token throughput of 2,000 to 3,000 tokens per second for models with around 10 billion parameters.
FuriosaAI’s approach to innovation is evident in its quick development and optimisation cycles. Within weeks of receiving silicon for their first-generation chip in 2021, the company achieved notable results in MLPerf benchmarks, with performance improvements reaching 113% in subsequent submissions. The RNGD chip is the next step in their strategy, offering a sustainable solution with a lower power draw than leading GPUs.
The RNGD chip is sampled by early access customers, with a broader release anticipated in early 2025. FuriosaAI’s CEO, June Paik, expressed pride in the team’s dedication and excitement for the future as the company continues to push the boundaries of AI computing.
Chinese entities linked to the state are turning to cloud services from Amazon and its rivals to access advanced US chips and AI capabilities that are otherwise restricted. Over the past year, at least 11 Chinese organisations have sought cloud services to bypass US export restrictions on high-end AI chips, according to tender documents.
Amazon Web Services (AWS) was specifically mentioned as a provider in several cases, though Chinese intermediaries were used to access the services. US regulations focus on the export or transfer of physical technology, leaving a loophole for cloud-based access. This has allowed US companies to profit from China’s growing demand for computing power.
Efforts to close this loophole are ongoing. US legislators have expressed concerns, and the Commerce Department is considering new rules to tighten control over remote access to advanced technology. AWS has stated that it complies with all applicable laws, including trade regulations in the countries where it operates.
Microsoft’s cloud services have also been sought by Chinese universities for AI projects. These activities highlight the increasing demand for US technology in China and the challenges in enforcing export controls. Both Amazon and Microsoft declined to comment on specific deals, but the implications for US-China tech relations are significant.
The UK-India Technology Security Initiative (TSI) has made notable progress since its launch, reflecting a commitment to strengthening bilateral relations and fostering economic growth through collaboration in emerging technologies. Recently, the National Security Advisors from both countries convened to establish a framework for the initiative, focusing on regulatory and licensing protocols. That meeting resulted in the formation of a bilateral task force designed to streamline communication between the Indian Ministry of External Affairs and the UK government, ensuring a cohesive approach to the initiative’s objectives.
Regarding sector-specific collaborations, discussions have commenced in key areas such as telecommunications, critical minerals, AI, quantum, health and biotechnology, advanced materials and semiconductors. The two nations are exploring the implementation of Open RAN systems to enhance telecom security and innovation.
Investment partnerships are also a significant focus of the TSI. Investment forums are being organized to attract Indian enterprises, particularly in green technology, offshore wind, and green hydrogen sectors. The initiative includes dedicated programs to empower women in technology, with funding opportunities designed to support their participation and leadership in these fields. This emphasis on inclusivity highlights the initiative’s broader goal of fostering sustainable economic development.
Moreover, the TSI is addressing global tech governance by collaborating on the establishment of digital technical standards and frameworks for internet governance and cybersecurity. This proactive approach aims to tackle emerging challenges in the digital landscape, ensuring that both countries are well-prepared to navigate the complexities of technology in a global context.
Why does this matter?
Looking ahead, plans are in place to launch initiatives focused on technology research centres, incubators, and academic partnerships. As the TSI progresses, further updates will highlight specific projects and collaborations, aligning with the goals of the India-UK Roadmap 2030.
Taiwan experienced a robust increase in export orders in July, with a 4.8% rise to $50.03 billion, surpassing expectations. The surge was primarily driven by the growing demand for chips used in AI and other advanced technology products. The Ministry of Economic Affairs noted that high-speed computing and preparations for new consumer electronics were significant factors behind the growth.
Orders from the United States saw a notable increase, jumping 14.3% in July compared to a 3.7% rise in June. In contrast, orders from China remained flat, showing a slight decrease of 0.1% after a 3.5% gain in the previous month. The mixed performance highlights the varying demand for Taiwanese products across different regions.
The Ministry also reported growth in orders from other regions, including a 6.1% rise from Europe and a 2.4% increase from Japan. These figures suggest that technology sector of Taiwan remains resilient amid global economic uncertainties, with strong demand for its products across multiple markets.
Looking ahead, the Taiwanese government is optimistic about sustaining this momentum. Officials predict that export orders will continue to grow, with an expected increase ranging from 6.7% to 11.0% in August.
The European Commission has approved €5 billion in German state aid to support the construction of a new microchip plant in Dresden by the European Semiconductor Manufacturing Company (ESMC), led by Taiwan’s TSMC. This subsidy marks the largest awarded under the EU Chips Act and is Germany’s first such contribution. The plant, which is expected to cost a total of €10 billion, will operate as an open foundry, allowing any customer, including the joint venture partners Bosch, Infineon, and NXP, to order chip production.
The Dresden facility is set to begin production in 2027. It will focus on producing chips essential for automotive and industrial applications, though slightly behind the cutting-edge technology used in AI chips and smartphones. The plant aims to bolster Europe’s resilience against future chip shortages similar to those experienced during the COVID-19 pandemic. The EU and German officials praised the project, emphasising its strategic importance for European manufacturing.
Two leading South Korean AI chip makers, Rebellions Inc and Sapeon Korea Inc, have agreed to merge, aiming to compete with global giants like Nvidia. The merger, confirmed after negotiations began in June, represents a significant move in the competitive AI chip market.
Sapeon Korea is backed by major firms in South Korea, including SK Telecom and SK Hynix, adding considerable strength to the merger. Rebellions, on the other hand, recently secured a $15 million investment from Saudi Aramco’s venture capital arm, Wa’ed Ventures, raising its total funding to over $225 million.
The combined entity is expected to leverage its enhanced resources and technology to innovate and compete more effectively. With strong backing and significant funding, the merger could reshape the landscape of the AI chip market in the region.
AMD announced plans to acquire server maker ZT Systems for $4.9 billion, aiming to strengthen its position in the AI hardware market and compete with industry leader Nvidia. The acquisition will be financed through a combination of cash and stock, with AMD leveraging its $5.34 billion in cash reserves. That strategic move is intended to enhance AMD’s ability to meet the growing computing demands of AI, where the integration of vast numbers of chips into powerful server systems is crucial.
ZT Systems, which generates about $10 billion in annual revenue, will bring approximately 1,000 engineers to AMD, allowing the company to accelerate the testing and deployment of its AI GPUs on a larger scale, particularly for major cloud providers like Microsoft. AMD’s CEO, Lisa Su, emphasised that AI systems are the company’s top strategic priority and expects the acquisition to boost GPU sales significantly. However, AMD plans to divest ZT Systems’ server manufacturing business post-acquisition, as it does not intend to compete in that segment.
The deal is expected to close in the first half of 2025, with AMD anticipating a positive impact on its financial performance by the end of that year. The following acquisition is part of AMD’s broader strategy to challenge Nvidia’s dominance in the AI hardware space, where Nvidia is projected to generate $105.9 billion from its data centre segment this year.
Chipmaker giant, Texas Instruments, has been awarded up to $1.6 billion in funding from the US Commerce Department to support the construction of three new semiconductor factories. This financial boost, part of the CHIPS and Science Act, will enable the company to build two facilities in Texas and one in Utah.
The investment is set to create approximately 2,000 new jobs and will be complemented by an additional $6 billion to $8 billion in tax credits and $10 million for workforce development.
The move aligns with the Biden Administration’s broader strategy to enhance domestic semiconductor production. With a commitment of $18 billion through 2029, Texas Instruments plans to increase its internal manufacturing capacity to over 95% by 2030. However, new facilities will produce critical analog and embedded processing chips, essential for various technologies, from smartphones to vehicles.
Apart from that, The CHIPS Act, passed in 2022, aims to boost US semiconductor manufacturing with a total of $52.7 billion in funding. This includes significant subsidies for production and research and development. The funding for Texas Instruments follows similar substantial awards to other major chipmakers, such as Intel and Micron Technology, further underscoring the US government’s commitment to strengthening the semiconductor supply chain.
Belgium’s imec, a leading semiconductor R&D firm, announced significant breakthroughs in chip-making technology at its joint laboratory with ASML. The advancements were made using ASML’s latest 350 million euro ($382 million) chip printing machine. Imec successfully printed circuitry as small or smaller than the best currently in commercial production, in a single pass under ASML’s new “High NA” tool, suggesting that leading chipmakers can use this tool to create smaller, faster chips in the coming years.
The High NA tool’s ability to print smaller features in fewer steps is expected to save chipmakers money and justify its high price tag. ASML is the largest supplier of lithography systems, crucial for creating chip circuitry. The development indicates that the necessary chemicals and tools for the rest of the chipmaking process are also falling into place for commercial manufacturing. Imec CEO Luc Van den Hove stated that High NA will be instrumental in continuing the scaling of logic and memory technologies.
Intel has purchased the first two High NA tools, with a third expected to go to TSMC later this year. Intel’s director of lithography, Mark Philips, mentioned that a second tool is required for the volume of wafers and experiments needed to support a development line. Other chipmakers, including Samsung Electronics, SK Hynix, and Micron, have also ordered the High NA tool, highlighting its importance in the industry.
These developments come as Micron surpasses revenue expectations in Q3 despite a mixed outlook for Q4, and the US Commerce Department backs SK Hynix with $450 million for an AI plant. These advancements and investments underline the ongoing innovations and growth in the semiconductor sector.
