Chinese Tech’s Rush for Nvidia Chips Amid US Ban
Oct. 27, 2023. 2 min. read.
Chinese tech firms in rush to secure Nvidia chips 💻 before a US ban 🔒. Scrambling for AI essentials amid supply crunch, they face a blow to AI ambitions and seek domestic alternatives 🔄.
The Scramble for Nvidia GPUs
Chinese tech firms are in a frantic rush to secure Nvidia’s AI chips before a US ban cuts off their supply. Companies like Xiamen Hongxin Electron-Tech Co are “stepping up communication” with Nvidia distributors to meet client demands in the face of escalating restrictions on computing power chips. The situation reflects a broader panic among Chinese tech companies as they face the prospect of losing access to these critical components.
Navigating the Supply Crunch
With the supply of key graphics processing units (GPUs) getting tighter, firms are exploring all avenues to stock up. Inspur, China’s leading server maker and a significant distributor of Nvidia products, admitted to “actively stocking up” amid the crunch. These moves come as the US Commerce Department tightened export controls, specifically targeting Nvidia’s A800 and H800 chips, which were designed to comply with earlier export rules.
Impact on China’s AI Ambitions
The US restrictions are a significant setback for China’s artificial intelligence ambitions, particularly for tech giants racing to launch ChatGPT-like products in a market where OpenAI’s service is unavailable. Companies like Tencent Holdings, ByteDance, Baidu, and Alibaba Group Holding had placed substantial orders for these processors, amounting to billions of dollars, now jeopardized by the ban.
The Drive for Domestic Alternatives
As restrictions tighten on Nvidia products, Chinese firms are increasingly looking towards domestic AI chips and servers to fill the gap. Hongxin, for example, mentioned the need to increase the use of domestic AI chips to meet computing power demands. This shift indicates a potential growth opportunity for local AI chip and server manufacturers.
A Blow to China’s Tech Sector
Washington’s latest move strikes a hard blow to Chinese tech giants and their AI projects. The dependency on Nvidia’s state-of-the-art chips and the scramble to secure them before the ban fully takes effect underscore the challenges facing China’s tech sector in an increasingly restrictive global trade environment.