China's Internet Giants Rush To Purchase $5 Billion In Nvidia Chips Crucial To AI Ambitions By CIOTechOutlook Team

China's Internet Giants Rush To Purchase $5 Billion In Nvidia Chips Crucial To AI Ambitions

CIOTechOutlook Team | Friday, 11 August 2023, 12:16 IST

Leading internet companies in China are scrambling to acquire high-performance Nvidia chips, which are required for developing advanced generative artificial intelligence systems. Technology companies have ordered the chips in quantities totaling $5 billion.

According to several sources familiar with the situation, Chinese tech behemoths Baidu, ByteDance (owner of TikTok), Tencent, and Alibaba have collectively placed orders for approximately 100,000 A800 processors worth $1 billion with a US chip manufacturer.

The chips are expected to be available in 2023. Furthermore, the same Chinese firms have spent $4 billion on graphics processing units, with delivery scheduled for 2024.

Although an Nvidia spokesperson declined to provide additional details about the report, they did acknowledge that consumer internet companies and cloud service providers consistently invest significant sums in data centre components each year, often placing orders well in advance.

In response to these developments, it is worth noting that the Biden administration introduced comprehensive regulations aimed at maintaining the status quo of China's semiconductor industry in October of the previous year.

Simultaneously, the United States government has been pouring money into its own chip industry. Nvidia has made its A800 processors available in China in accordance with export control regulations. This action was prompted by a request from US authorities that the company stop exporting its leading computing chips for AI-related tasks to China.

Parallel to these events, President Biden signed an executive order, according to a recent Financial Times report. This order restricts specific US investments in sensitive Chinese technology domains and requires government notification of funding in other technology sectors.

In the midst of these developments, Nvidia's Chief Financial Officer stated in June that restrictions on AI chip exports to China could result in a permanent loss of opportunities for the US industry, though the company does not expect a significant impact right away.

The move has left analysts speculating on the motivations and intended applications behind this monumental acquisition of Nvidia chips, as China’s tech titans embark on a journey to solidify their roles in shaping the AI-driven future.

Baidu, ByteDance, Tencent, and Alibaba have refrained from providing immediate comments in response to inquiries from various media outlets.