Chinese companies are bringing their data outside China so they can use American AI chips in places such as Southeast Asia and the Middle East.
In early March, four Chinese engineers flew to Malaysia from Beijing, each carrying a suitcase packed with 15 hard drives. The drives contained 80 terabytes of spreadsheets, images and video clips for training an AI model.
At a Malaysian data center, the engineers’ employer had rented about 300 servers containing advanced Nvidia chips. The engineers fed the data into the servers, planning to build the AI model and bring it back home.
At the Chinese AI developer, the Malaysia game plans took months of preparation. Engineers decided it would be fastest to fly physical hard drives with data into the country, since transferring huge volumes of data over the internet could take months.
Before traveling, the company’s engineers in China spent more than eight weeks optimizing the data sets and adjusting the AI training program, knowing it would be hard to make major tweaks once the data was out of the country.
The Chinese engineers had turned to the same Malaysian data center last July, working through a Singaporean subsidiary. As Nvidia and its vendors began to conduct stricter audits on the end users of AI chips, the Chinese company was asked by the Malaysian data center late last year to work through a Malaysian entity, which the companies thought might trigger less scrutiny.
The Chinese company registered an entity in Kuala Lumpur, Malaysia’s capital, listing three Malaysian citizens as directors and an offshore holding company as its parent, according to a corporate registry document.
To avoid raising suspicions at Malaysian customs, the Chinese engineers packed their hard drives into four different suitcases. Last year, they traveled with the hard drives bundled into one piece of luggage.
They returned to China recently with the results — several hundred gigabytes of data, including model parameters that guide the AI system’s output.
The procedure, while cumbersome, avoided having to bring hardware such as chips or servers into China. That is getting more difficult because authorities in Southeast Asia are cracking down on transshipments through the region into China.
Computing centers are quickly sprouting up in Southeast Asia, serving both Western and Chinese customers.
Earlier this year, a Beijing-based tech firm took over a lease for 200 AI servers that a data center in Malaysia had originally earmarked for an American cloud-computing company.
In recent months, companies have rushed to purchase chips developed by Nvidia and AMD to install in data centers in Southeast Asia.
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