Artificial Intelligence: Chinese Internet Companies Place Billions Of Dollars’ Worth Of Orders For Nvidia AI Chips
The internet giants are amassing the Nvidia chips before a U.S. export ban becomes effective.
China’s internet giants, including Baidu (HKG: 9888), ByteDance, Tencent (HKG: 0700), and Alibaba (HKG: 9988), are aggressively purchasing Nvidia (NASDAQ: NVDA) chips valued at $5 billion to build generative artificial intelligence systems. This rush is fueled by concerns that the US might impose new export controls.
The companies have ordered $1 billion worth of Nvidia’s A800 processors to be delivered this year and an additional $4 billion worth for 2024. The A800 is a modified version of Nvidia’s advanced A100 GPU due to export restrictions placed on China. These chips are essential for training large language AI models. (Financial Times)
The companies are stockpiling Nvidia chips amidst fears of potential export restrictions and a global GPU shortage. The Chinese giants are developing their own language models following the success of Microsoft-backed OpenAI’s ChatGPT. For instance, ByteDance is working on an AI chatbot named Grace. Alibaba aims to integrate its products with its large language model, and Baidu is developing a ChatGPT-like project called Ernie Bot.
The companies declined to comment, while Nvidia highlighted the significant investments made by consumer internet companies and cloud providers in data center components. The demand for these chips has increased, driving up their cost, with some distributors reporting a more than 50% price increase.
Tencent and Alibaba Cloud have also introduced servers and cloud services powered by Nvidia’s GPUs to meet demand for large language model services.
Related Story: Nervous Of Misuse By Its Military, The Biden Administration Restricts Investment In Certain Chinese Tech Sectors
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