China’s Moonshot sought Nvidia chips via Europe loophole

Moonshot AI, the Beijing-based maker of the Kimi models, has held talks this year about renting capacity on Nvidia ↘ 3.17% Blackwell chips from neoclouds in Europe. Four people familiar with the matter told CNBC about the talks. U.S. export controls effectively bar these chips from being imported into China. Renting them through data centers overseas is a loophole that current law does not give regulators broad power to close, CNBC reported.cnbc.com

The report came two days after the Financial Times said Nvidia had told cloud partners that at least 51% of their services must go to non-Chinese customers. According to Barron's, carrying AFP, that rule covers new contracts and leaves existing agreements in place.barrons.com

Large clusters and higher upfront payments

Moonshot was mainly looking for inference clusters in Europe, meaning capacity used to serve models to end users, two sources told CNBC. One source was also aware of interest in training capacity. One person said talks covered clusters of 8,000 or more Blackwell GPUs and called the lab "very aggressive" in its hunt for computing power. Another source said Moonshot had been asked to pay 30% to 50% more upfront than a non-Chinese customer would. Neoclouds want that extra money as a hedge in case remote access deals are banned later.cnbc.com

These talks continued after the White House said in July that Moonshot had used Blackwell chips through a facility in Thailand, CNBC reported. Moonshot, Nvidia, the White House and the Commerce Department did not respond to CNBC's requests for comment. Demand for Moonshot's Kimi K3 model has been high. Around the model's July release, the company paused new subscriptions so it could keep compute for existing members.cnbc.com

Nvidia's 51% rule

The FT, citing five people, said Nvidia's sales and regional teams passed the guidance on verbally and that it applies to cloud partners worldwide, according to The Next Web. Reports differ on whether the 51% applies to revenue, customers or computing capacity. Nvidia has not said how it would check compliance, Forbes noted. A Singapore-based provider told the FT that it is hard to find enough non-Chinese customers outside the U.S.forbes.com+1

Nvidia did not confirm or deny the report. In a statement, it said that "longstanding U.S. policy encourages every cloud to build on American infrastructure and to win business everywhere they can," according to AFP via Barron's. Chinese foreign ministry spokeswoman Mao Ning said she was not aware of the report.barrons.com

Pressure in Washington

In Congress, the Remote Access Security Act would extend export controls to cloud-based access to critical hardware. It passed the House in January but has not passed the Senate, CNBC reported. Nvidia is scheduled to report earnings on November 17, Forbes noted.forbes.com+1

Asked about the reports this week, an Nvidia spokesperson told CNBC that "America cannot win the AI race unless America's AI infrastructure wins worldwide."cnbc.com