Chinese AI companies have found a way to easily circumvent US sanctions on the supply of AI chips to China. To do this, IT specialists from these companies simply fly to countries where US restrictions do not apply and return with suitcases of hard drives containing AI.
Chinese AI companies have found a way to easily circumvent US sanctions on the supply of AI chips to China. To do this, IT specialists from these companies simply fly to countries where US restrictions do not apply and return with suitcases of hard drives containing AI.
As Futurism reports, citing the Wall Street Journal, the scheme works as follows.
Chinese software companies rent data centers in countries like Malaysia (the Biden administration previously imposed strict controls on chip exports to the country, but Trump’s tariffs have eased those restrictions considerably), which store large stocks of American-made chips. The Chinese companies then send software engineers to Malaysia with suitcases full of hard drives.
Each drive contains terabytes of data for training artificial intelligence. Upon arrival in Malaysia, Chinese engineers connect this data to servers and train artificial intelligence models. When the work is finished, the engineers save the trained large language model (LLM) to their drives and return home.
This method of circumventing sanctions is used throughout Southeast Asia and the Middle East. While it may seem simple on paper, it can take eight weeks or more to complete, and everything must be in place before the engineers arrive, as it would be difficult to make significant changes once the disks are out of the mainland.
«That was something that we were constantly concerned about», — said Thea Candler, a Biden administration official responsible for exports. It is noted that a strong Chinese technology sector poses a serious threat to US economic interests and could undermine American dominance in the AI technology market.
In August 2023, former US President Joe Biden signed an executive order restricting the country’s investment in Chinese technologies, including quantum computing, advanced chips, and artificial intelligence.
Despite this, sanctions have not been able to prevent China from mastering the 7-nanometer chip manufacturing process. And in 2025, the world started talking about China’s DeepSeek AI models, which were trained using efficient computational methods and made many analysts and technologists in the West wonder whether the US will be able to maintain its lead in the AI race and whether the demand for AI chips will remain.
