Chinese Companies Spent $5 Billion on Nvidia AI Chips

Nvidia received a large amount of orders from Chinese internet giants for chipsets to power AI systems. Chinese companies are trying to rapidly stockpile equipment due to fears the US could further tighten export rules.

Financial Times reported Tencent, Alibaba, Baidu, and ByteDance placed orders with Nvidia worth $5 billion for graphics processing units, due to be delivered later this year and in 2024. The orders include 100,000 A800 processors, which is apparently the weakened version of Nvidia’s A100 GPU for data centers. The more powerful processor is not available to Chinese companies due to existing US export rules.

In late 2022, the US blocked Chinese companies from acquiring advanced semiconductors and chipmaking equipment. This week, the US announced a ban on domestic businesses investing in China’s AI and quantum computing sectors, starting from 2024. Bulk orders have also been made due to fears about GPU shortages fuelled by rising demand.

An unnamed Baidu employee told FT it will not be able to train any large-language model without Nvidia’s silicon. The Chinese companies are all developing their own large-language models to rival OpenAI’s ChatGPT and Google’s Bard. Nvidia is an early pacesetter in the AI market, with its GPUs increasingly used by big technology companies to develop large-language AI models. It is, however, beginning to see more competition in the market, with AMD looking to gain a foothold.