China’s leading tech firms are increasingly training their large-language models (LLMs) abroad — primarily in Southeast Asia — to maintain access to advanced NVIDIA hardware, despite U.S. export restrictions.
🔧 Why the Shift: Export Restrictions and High-Compute Demand
- In April 2025, U.S. export controls tightened on powerful NVIDIA AI chips such as the H20, limiting Chinese companies’ direct access.
- To bypass these constraints, firms like Alibaba and ByteDance have reportedly leased data-centre space in foreign-owned facilities — especially in Southeast Asian countries — where hardware equipped with NVIDIA GPUs remains accessible.
- The overseas training strategy is legal under current export-control rules, since the hardware never enters Chinese territory, avoiding direct import restrictions
🚀 What This Means for AI Development in China
- AI models from these firms — e.g. Alibaba’s LLMs and ByteDance’s own large-scale language models — continue to evolve and train using cutting-edge computing power, enabling them to remain competitive globally
- The move underscores a broader trend: China’s tech leaders are balancing between reliance on foreign chips for heavy training workloads and domestic chips for inference or lighter tasks
- This hybrid hardware strategy shows adaptability — while geopolitical tensions grow, companies find technical and legal workarounds to sustain AI R&D momentum.
⚠️ Challenges & Regulatory Pressure from Inside China
- Despite overseas workarounds, there’s growing pressure on local AI firms to adopt domestically-made chips. Earlier in 2025, some Chinese companies began shifting smaller-scale workloads to their own silicon.
- Additionally, the reliance on foreign-operated data centers for core training tasks means potential exposure to geopolitical risk, regulation changes, or foreign oversight — adding complexity to China’s AI ambitions.
- The resource-intensive nature of training large models abroad (data transfer, latency, compliance) may limit how scalable this approach remains long-term.
🌍 Global & Industry Implications
- For global AI hardware vendors like NVIDIA, demand from Chinese tech companies remains — albeit through indirect channels — showing that export bans alone may not fully curb hardware usage.
- The trend may push China’s domestic chip industry harder: as foreign-chip access becomes restrictive or uncertain, demand for high-performance Chinese AI chips (from companies like Cambricon, Enflame Technology and others) could rise
- On a broader level, the situation highlights the interplay between geopolitics, regulation, and technological innovation — and how companies adapt infrastructure strategies accordingly.
