China’s Internet giants order $6.7b of Nvidia chips to power AI ambitions: Report

BEIJING – China’s Internet giants are rushing to acquire high-performance Nvidia chips vital for building generative artificial intelligence (AI) systems, making orders worth US$5 billion (S$6.7 billion), the Financial Times (FT) reported on Wednesday.

Baidu, TikTok owner ByteDance, Tencent and Alibaba have made orders worth US$1 billion to acquire about 100,000 A800 processors from the US chipmaker to be delivered in 2023, FT reported, citing multiple sources familiar with the matter. The Chinese groups had also purchased another US$4 billion worth of graphics processing units to be delivered in 2024, according to the report.

A spokesman for Nvidia would not elaborate on the report but said “consumer Internet companies and cloud providers invest billions of dollars on data centre components every year, often placing orders many months in advance”.

The Biden administration last October issued a sweeping set of rules

designed to freeze China’s semiconductor industry in place

while the United States pours billions of dollars in subsidies into its chip industry.

Nvidia offers the A800 processor in China to meet export control rules

after US officials asked the company to stop exporting its two top computing chips to the country for AI-related work.

The FT report comes as President Joe Biden on Wednesday signed an executive order that

would narrowly prohibit certain US investments in sensitive technology in China

and require government notification of funding in other tech sectors.

Nvidia’s finance chief said in June that restrictions on exports of AI chips to China “would result in a permanent loss of opportunities for the US industry”, though the company expected no immediate material impact. REUTERS