American technology corporations OpenAI and Google have been supplying advanced artificial intelligence services to Singapore-based subsidiaries of Chinese companies Alibaba, Baidu, and Tencent, according to a Financial Times report confirmed by the firms. All three Chinese parents appear on a Pentagon list of entities accused of collaborating with China’s military. The revelation exposes a gap in Washington’s efforts to slow Beijing’s AI development: while the US has restricted access to specific frontier models, current rules do not prohibit blacklisted companies from using other AI software through units outside mainland China.

OpenAI told the FT it suspended API access for users linked to Alibaba last month after journalists’ inquiries, citing concerns over potential data extraction to train rival models. Google stated its AI services are available in Hong Kong and Singapore under policies that forbid use in other regions. By contrast, Anthropic has imposed a global ban on Chinese firms using its models and reported to Congress that Alibaba employed 25,000 fake accounts to conduct over 28.8 million data exchanges with its Claude system. Viewed from Washington, the episode underscores the difficulty of enforcing technology controls when service provision can be routed through third-country subsidiaries.

Simultaneously, Beijing is selectively relaxing its own restrictions. The government has informed several domestic AI companies—including Alibaba, ByteDance, and DeepSeek—that they may apply to purchase limited quantities of Nvidia’s H200 chips, reversing an earlier hold. The move comes as Chinese chip designers, shielded by export controls, are projected to capture about four-fifths of domestic AI chip spending this year. Huawei has unveiled a technique to stack circuit layers for better performance without cutting-edge Western tools, and DeepSeek has tuned a large language model for Huawei’s silicon. Yet manufacturing bottlenecks persist, leaving China’s compute capacity at roughly one-seventh that of the United States.

In South Korea, the AI boom is reshaping the semiconductor landscape. Memory chip makers Samsung Electronics and SK Hynix dominate the market for high-bandwidth memory essential to AI systems, driving a 75 per cent surge in the country’s aggregate exports in just over a year. The two firms, with state backing, plan investments totalling around 1,350 trillion won ($880 billion) in new chipmaking plants, while their market capitalisations have soared on speculative fervour, including leveraged exchange-traded funds linked to SK Hynix stock. The next factual milestones to watch are whether Washington moves to close the subsidiary loophole and whether Nvidia’s H200 sales to China actually proceed—the company has not yet included such revenue in its financial projections.