Despite mounting export controls from the United States, Chinese AI engineers have once again found a way to gain access to cutting-edge AI hardware. This time, it’s not chips being smuggled, but terabytes of training data flown in suitcases. According to a Wall Street Journal report, Chinese developers transported over 80TB of data – including images, videos, and spreadsheets – via physical hard drives into Malaysia to train AI models using rented NVIDIA GPUs.
Instead of waiting for slow and potentially monitored data transfers, Chinese engineers carefully coordinated a months-long operation to hand-carry data across borders. The drives were discreetly packed into four separate suitcases and flown into Malaysia, where the data was processed in data centers linked to Singaporean subsidiaries. These centers reportedly house powerful NVIDIA Hopper-generation chips – the very tech the U.S. is trying to keep out of China’s hands.
This isn’t the first workaround Chinese companies have pulled off. From renting offshore AI servers to outright smuggling, China’s determination to keep pace in the global AI race is relentless. Southeast Asia, especially Malaysia and Singapore, has become a critical hub in this effort. U.S. officials have noted a striking increase in NVIDIA hardware being exported to Malaysia – $3.4 billion last quarter alone – and it’s no secret that a large portion of this serves Chinese firms through intermediaries.
Even under sanctions, the AI arms race shows no signs of slowing. As long as there’s demand – and a loophole to exploit – China appears more than ready to meet its AI ambitions head-on, suitcase in hand.