According to industry sources, China’s Internet giants are hoarding Nvidia chips, which are mainly used to build generative artificial intelligence systems.
The Financial Times reported that the total number of known orders has exceeded $5 billion (about 36.05 billion yuan). Industry analysts blame fears of U.S. restrictions for the chip buying spree.
It is reported that the four major domestic Internet giants (Baidu, Ali, Tencent and byte) have now placed an order worth $1 billion of chips to Nvidia, and will deliver about 100,000 A800 processors this year.
The A800/H800 processor is a simplified version of the AI processor produced by Nvidia for the Chinese market in order to avoid the new semiconductor regulations of the US Department of Commerce, which is used to replace its most advanced A100/H100 processor, and the latest news says that the chip price has doubled.
The Chinese Internet giants have also bought $4 billion worth of graphics processing units (Gpus) that will be delivered by 2024, according to people close to Nvidia.
In the field of AI, many algorithms need to process a large amount of data, and Gpus that can process a large number of computing tasks in parallel in a short time have been favored, and deep learning models that require months of training on traditional cpus can be completed in a very short time.
In the AI craze set off by ChatGPT, a large number of Chinese Internet companies have developed their own large language models.
According to two people familiar with the matter, ByteDance has a number of small teams working on various generative AI products, including an AI chatbot code-named Grace, which is currently undergoing internal testing.
The people also added that ByteDance has stockpiled tens of thousands of Nvidia Gpus, in addition to ordering about $700 million worth of nearly 70,000 A800 chips, which will be delivered next year.
Similarly, Alibaba also plans to incorporate AI large-scale language models into its product matrix, such as Taobao, Tmall, Alipay and Amap. Baidu is training a generative AI chatbot called Ernie Bot……
A spokesman for Nvidia declined to elaborate on the Chinese Internet giant’s hoarding of chips, but said consumer Internet companies and cloud providers invest billions of dollars a year in data center components and place orders months in advance.
As we all know, early this morning, US President Biden signed an executive order to establish an outbound investment review mechanism, authorizing the US Treasury Department to prohibit or restrict US investment in Chinese entities in three fields, including semiconductors and microelectronics, quantum information technology and artificial intelligence systems.
Subsequently, the Chinese Ministry of Foreign Affairs and Ministry of Commerce expressed dissatisfaction and opposition, and accused the act of violating the principles of market economy and fair competition, undermining the international economic and trade order, and seriously disrupting the stability of the global industrial chain and supply chain.
The executive order is expected to be implemented next year after several rounds of public comment. While US officials insist the order is aimed at addressing the most pressing national security risks, rather than separating the highly dependent economic relationship between the two countries, the move is still likely to exacerbate tensions.
This afternoon, semiconductor companies in the United States called for as much liberalization of restrictions on China as possible to ensure smooth access to the Chinese market, and urged authorities to de-escalate the situation and seek solutions rather than escalate restrictions.
Colette Kress, vice president and chief financial officer of Nvidia, said that the chip export control measures in the United States will affect the sales of A800/H800 chips in China, although the current high demand for Nvidia chips in the world will not have a significant impact in the short term, but in the long term, The United States may lose the opportunity to compete and lead in one of the world’s largest markets (China) in the future, which will still have an impact on Nvidia’s business and revenue.