Chip smuggling pathway 2: Chinese cloud providers redirect AI chips

PRC-linked actors set up or use existing data centers outside China, place bulk orders for AI chips, and then redirect some fraction of those chips to China.

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A distribution of simulated possible outcomes. The median estimated outcome is 18,000 AI chips smuggled to China per year, with a 95 percent confidence interval of 1,600 to 200,000. This distribution was generated using Monte Carlo simulations: 10 million simulations were run, each modeling a different combination of key parameters influencing the success of a smuggling operation. For example, how many chips could be diverted by a cloud provider each year without rousing suspicion?