China's Tech Giants Rush to Buy $5B NVIDIA Chips for AI Ambitions

China's Tech Giants Rush to Buy $5B NVIDIA Chips for AI Ambitions
Image Credit: NVIDIA

Chinese internet giants are aggressively stockpiling high-performance GPUs from NVIDIA to power their burgeoning artificial intelligence efforts, according to a new report.

According to a report by Nikkei Asia, Baidu, ByteDance, Tencent and Alibaba have made roughly $5 billion worth of orders for NVIDIA's specialized A800 data center GPUs to be delivered over the next two years. The report cites industry sources claiming the companies have already secured around 100,000 chips to be delivered in 2023, along with a further $4 billion deal for 2024.

The rush stems from both booming demand and supply constraints. As generative AI hits the mainstream with innovations like ChatGPT, Chinese tech firms are racing to develop their own models and services. But chip shortages and the threat of tighter U.S. export controls on advanced semiconductors have compelled the companies to stockpile Nvidia GPUs while they still can.

Nvidia's A800 graphics chip, while not its cutting edge model, provides the parallel processing power needed to train complex AI algorithms on massive datasets. But due to U.S. export restrictions, the A800s sold to China have reduced capabilities (slower data transfer rates) compared to the full A100.

Nonetheless, the chips remain highly coveted. According to industry sources cited in the report, prices for the A800 in the gray market have surged over 50% amid insatiable demand.

Each of the Chinese tech giants has major generative AI projects underway. Baidu is developing an AI assistant called Ernie Bot. ByteDance has tested generative AI in TikTok and is reportedly building an AI chatbot codenamed Grace. Alibaba plans to integrate generative AI across its platforms, including e-commerce site Taobao.

Tencent recently launched AI cloud computing services using NVIDIA's H800 GPU, another specialized AI chip adapted for China. Alibaba Cloud has also secured thousands of the H800 chips to meet customer demand for services like ChatGPT.

The NVIDIA orders show how ambitiously China's tech industry is investing in homegrown generative AI, even as geopolitical tensions threaten access to key hardware components. But with U.S. export controls ever-evolving, Chinese firms are wasting no time building stockpiles to power their AI dreams.

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