The chips never move: Washington's fix for the Southeast Asia compute loophole

A White House official has publicly accused a Chinese AI lab of using Nvidia's restricted GB300 chips through a data center in Thailand, and the bill written to stop that is sitting in the Senate ^[3][12]. The gap matters because the US export control regime was built around hardware crossing a border, and this trade does not require the hardware to move.

Less than a week after Moonshot AI released a new model in July, White House official Michael Kratsios accused the company of tapping GB300s via a Thai facility ^[3]. Nvidia's most advanced AI chips are barred from export to China, while less capable parts are still allowed ^[1]. Moonshot's Kimi K3 is one of several recent Chinese models, alongside new systems from DeepSeek and Alibaba, that have scored well on performance benchmarks ^[4][5].

The awkward part for Washington is that the arrangement described may be lawful. Cassia King, senior researcher on the Compute Policy team at the Institute for AI Policy and Strategy, told CNBC that Moonshot's reported access through a Thai facility was legal "so long as Moonshot isn't actually buying and owning the physical hardware directly," because the regime "controls physical AI chips. It does not cover remote access to those chips" ^[6][7]. A White House official told CNBC the administration "has implemented the most rigorous export control regime in modern history" and remains committed to safeguarding national and economic security ^[8]. The Commerce Department and the Bureau of Industry and Security did not respond to CNBC's request for comment ^[9].

The pattern is not one lab. Chinese hyperscalers including ByteDance, Alibaba and Tencent have reportedly accessed Nvidia compute remotely via Thailand, Malaysia and Japan ^[10]. ByteDance was working with Singapore-headquartered cloud provider Aolani to reach compute in Malaysia, according to a source familiar with the matter cited by CNBC, an arrangement the Wall Street Journal first reported in March ^[11]. Aolani told CNBC its customers "do not have ownership, potential future claim or physical access to the chips that power our solutions" and that access to its services is fully compliant with applicable regulations ^[13].

The supply of places to do this is growing quickly. DC Byte data shows 31 planned data centers of 100MW or larger across Malaysia, Indonesia and Thailand, against two today, roughly a fifteenfold increase in sites at that scale ^[14][15]. JLL estimates global data center capacity could roughly double to 200GW by 2030, implying about 100GW now ^[16][17]. Michelle Nie, a visiting fellow at the Center for a New American Security, told CNBC the loophole was "threatening U.S. national security," since the point of chip controls "is to deny China the ability to train frontier AI using advanced U.S. chips" ^[18][19].

The Remote Access Security Act would extend export controls to remote cloud access of controlled hardware and software. It passed the House in January and has not passed the Senate ^[12]. Nie cautioned that passage alone would not fix the problem: it grants the authority to regulate remote access, after which the government still has to write a rule actually controlling it ^[21]. Cloud providers would carry the compliance burden of any know-your-customer and verification requirements, which invites industry pushback ^[20].

Watch three things: whether RASA clears the Senate, whether BIS follows with an actual rule rather than authority on paper, and how fast those 31 planned sites come online relative to any verification regime ^[12][21][14].