Archive · 20 Aug 2026
US Moves to Close Cloud Loophole for Banned AI Chips
The United States banned China from buying some of its most powerful computer chips.
However, Chinese companies may still be able to rent time on those chips if the machines are located in another country.
This is similar to renting a computer instead of bringing the computer across a border.
White House official Michael Kratsios accused Moonshot AI of using powerful Nvidia chips in Thailand.
Moonshot later released an AI model called Kimi K3 that performed very well in some tests.
The US is investigating whether overseas companies or cloud providers helped provide the computing power.
A proposed law would treat remote use of restricted chips as an export.
Supporters say this would close an important loophole, while critics are concerned about the burden on cloud companies and other countries.
The article gives conflicting dates for the accusation and Kimi K3’s release, listing July 22 for the accusation and July 27 for the release while also calling the release earlier.
US export controls prohibit Chinese firms from buying Nvidia GB300 chips but may not cover renting access to them abroad.
White House science adviser Michael Kratsios accused Moonshot AI of using GB300-equipped servers in Thailand.
Moonshot AI’s Kimi K3 reportedly used about 20,000 Nvidia chips through Alibaba infrastructure and performed strongly on major benchmarks.
The Bureau of Industry and Security is investigating whether overseas subsidiaries or cloud providers enabled access to restricted compute.
The Remote Access Security Act passed the House in January but remains stalled in the Senate.
- Who
- The United States, Nvidia, Moonshot AI, Chinese companies, Michael Kratsios, and US regulators and lawmakers.
- What
- The US is examining whether Chinese entities can bypass chip export controls by remotely renting access to restricted Nvidia hardware located abroad.
- When
- The article refers to July 22 and July 27, but describes the July 27 Kimi K3 release as occurring days after the July 22 accusation, creating a date inconsistency; the House passed the proposed law in January.
- Where
- The disputed infrastructure was reportedly located in Thailand, with other overseas facilities mentioned across Southeast Asia; the policy issue concerns access worldwide.
- Why
- Existing controls focus on the physical shipment of chips, while cloud computing allows users to access chips remotely without moving the hardware into China.
Close the remote-access loophole
Preserve cloud flexibility and limit enforcement burdens
How export controls should work
Close the remote-access loophole
Remote access to restricted chips should count as an export so Chinese entities cannot obtain prohibited computing power through overseas data centers.
Preserve cloud flexibility and limit enforcement burdens
Extending export rules to remote access could redefine how global cloud computing operates, where the physical location of a machine is normally separate from the customer’s location.
Enforcement responsibilities
Close the remote-access loophole
Cloud providers should identify who ultimately controls workloads on restricted hardware and refuse service to prohibited users.
Preserve cloud flexibility and limit enforcement burdens
Requiring providers to determine the ultimate controller of every worldwide workload would create a much greater burden than checking shipping documents.
Global impact
Close the remote-access loophole
A broader rule would help ensure that US chip controls achieve their intended effect, including when hardware is hosted outside China.
Preserve cloud flexibility and limit enforcement burdens
Although aimed at China, the proposed framework could give the United States licensing influence over AI-compute users in countries such as India, Europe, and the Gulf.
- Restricted chip
- Nvidia’s GB300 is explicitly barred from export to Chinese firms; the article says lower-tier H200 chips have received exemptions.
- Accusation
- Michael Kratsios accused Moonshot AI of obtaining GB300-equipped servers and routing workloads through infrastructure in Thailand.
- AI model
- Moonshot AI’s Kimi K3 is described as a 2.8-trillion-parameter open-weight model with a one-million-token context window.
- Reported compute
- Reports cited in the article say Kimi K3’s training used roughly 20,000 Nvidia chips accessed through Alibaba infrastructure.
- Investigation
- The Bureau of Industry and Security is examining possible use of overseas subsidiaries or third-party cloud providers to bypass restrictions.
- Proposed legislation
- The Remote Access Security Act would treat cloud-based access to restricted hardware as an export event.
- Legislative status
- The Remote Access Security Act passed the House in January but has not advanced in the Senate.