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Chinese Entities Skirt U.S. AI Chip Bans via Shenzhen and Hong Kong, Nvidia Under DOJ Investigation

Aug 4, 2024, 12:00 PM

Despite U.S. efforts to block the sale of advanced AI chips to China, a New York Times investigation has revealed that Chinese entities are circumventing these restrictions through smuggling and front companies, particularly in Shenzhen's bustling market and via Hong Kong. Nvidia, a leading producer of these microchips, is at the center of this controversy. The U.S. government is concerned that these chips could enhance China's military capabilities. The Department of Justice is investigating Nvidia for potential monopolistic practices. Meanwhile, the Biden administration is advised to leverage the temporary slowdown in Chinese technological advancement due to export controls to secure a lead in critical technologies. Experts argue that restricting open-source software will not prevent China from accessing state-of-the-art AI technology, as the global nature of the chip industry creates multiple points of access. The investigation highlights that at least 24 Chinese companies with ties to the military have procured these restricted chips, raising significant national security concerns.