Chinese Firms Are Evading Chip Controls
Here’s how the Biden administration can enforce the ban.
foreignpolicy.com
This past fall, the Biden administration moved decisively to cut off China’s supply of powerful chips, targeting the cutting-edge semiconductors used for supercomputing and artificial intelligence. However, recent reporting points to blacklisted Chinese entities—including China’s top nuclear weapons lab—gaining access to restricted chips through a combination of smuggling and renting through the cloud. Smuggling also appears to be possible for low-level vendors: Other recent reporting found that Chinese small businesses are smuggling restricted chips through neighboring countries, and that 40,000 to 50,000 of these chips are already in China. If the administration wants to succeed in holding a chokepoint over national security-sensitive supercomputing, the U.S. agency tasked with export control enforcement (the Bureau of Industry and Security, or BIS) will have to get more creative.
To address these problems, we propose a random chip sampling program. What would this look like? First, require that sellers of controlled chips register their sales with the BIS using unique IDs assigned during manufacturing. Then place requirements on sellers to notify the BIS about any secondhand sales and any cases where chips are destroyed or lost. Finally, to stop chips from leaking into China, conduct randomized end-use checks to confirm the current registered owner of a chip actually has it in their possession. The BIS has historically done this with larger devices, such as lithography machines (a category of manufacturing equipment crucial for producing advanced chips). But given that millions of controlled chips are sold each year, BIS officials couldn’t hope to keep tabs on each one manually. Instead, by checking the location of a small but random share of all sold chips, the BIS would catch (or better yet, deter) any supercomputer-scale smuggling of chips to China. Thankfully, the most concerning use cases for these chips, such as building a next-generation authoritarian version of ChatGPT or conducting advanced ballistic simulations, require thousands of chips running continuously for weeks. We estimate that with 5,000 inspections a year, the BIS could achieve greater than 90 percent confidence that no smuggling of chips at this scale was occurring.
However, there is another loophole: virtual access through cloud computing services. For example: Nvidia to Rent Out AI Supercomputing Power to Chinese Companies, Founder Says Service providers are expected to implement guardrails to help prevent cloud chips from being used for applications that threaten U.S. national security.
