China’s leading internet giants, including Baidu, ByteDance (owner of TikTok), Tencent, and Alibaba, are reportedly racing to secure high-performance chips from Nvidia to fuel the development of generative artificial intelligence (AI) systems.
In addition to the immediate orders, the Chinese tech groups have committed to purchasing an additional $4 billion worth of graphics processing units (GPUs), set for delivery in 2024, as per the report. These investments underline China’s fervent pursuit of cutting-edge AI technologies to bolster their capabilities in various sectors.
While a spokesperson from Nvidia declined to provide detailed commentary on the report, they did emphasize that consumer internet companies and cloud providers make significant investments in data center components on an annual basis, often placing orders well in advance.
Nvidia’s A800 processor has been made available in China as part of the company’s efforts to comply with export control regulations. This move comes in response to a request from U.S. officials, who urged Nvidia to halt the export of its top two computing chips to China for AI-related purposes.
Research firm TrendForce recently said NVIDIA has the highest market share when it comes to AI server accelerator chips. However, the high costs associated with NVIDIA’s H100/H800 GPUs, priced at between US$20,000 and $25,000 per unit, coupled with an AI server’s recommended eight-card configuration, have increased the total cost of ownership. While CSPs will continue to source server GPUs from NVIDIA or AMD, they are concurrently planning to develop their own AI accelerator chips.
The race for AI-enhancing technology coincides with broader geopolitical developments. In October of the previous year, the Biden administration issued comprehensive rules designed to stabilize China’s semiconductor industry, while the U.S. government directed substantial subsidies into the domestic chip sector.
The strategic significance of this move is highlighted by Nvidia’s own observations. In June, Nvidia’s Chief Financial Officer commented on potential restrictions on AI chip exports to China, expressing concerns that such limitations could result in a lasting loss of opportunities for the U.S. industry. However, the company anticipated no immediate material impact.
These orders, representing a substantial investment by Chinese tech giants in advanced AI hardware, underscore the intense competition and desire to secure cutting-edge technologies as nations navigate the complex landscape of emerging technologies.