Alibaba, Baidu, ByteDance, and Tencent have collectively ordered $1 billion worth of Nvidia GPUs in an effort to bypass the US restrictions imposed on tech investments in China. These Chinese web and cloud providers are rushing to secure as many Nvidia GPUs as possible, fearing future limitations on access to American AI accelerators. According to insiders, they have purchased 100,000 Nvidia A800 GPUs, designed specifically to get around export limits on US-made AI accelerators. Additionally, these companies have reportedly ordered an additional $4 billion worth of GPUs for delivery next year, although the specific models are currently unknown.
The import of Nvidia GPUs is critical to Chinese organizations, particularly for training large language models (LLMs) that are fundamental to generative AI. Without these chips, Baidu claims it would be unable to train substantial LLMs, which are vital for developing competitive AI-powered services. The US export restrictions imposed last year set limitations on IO bandwidth, crippling the potential of accelerators when interconnected for parameter-heavy AI workloads. Nvidia, AMD, and Intel were initially prohibited from selling their latest generation GPUs and accelerators in China due to these restrictions. However, chipmakers have since modified their existing cards to comply with the rules. For example, Nvidia developed the A800, a modified version of its three-year-old A100, which reduced memory and interconnect bandwidth to meet the export requirements.
While the Biden administration is exploring further measures to restrict Chinese access to American chips, China still lacks fully homegrown chips capable of replacing US-made silicon. Chinese GPU development has been hindered by restrictions on US intellectual property used by major foundry operators. Biren Technology, a Chinese chipmaker, had to modify its design to meet the same interconnect restrictions as US chipmakers.
President Joe Biden recently signed an executive order imposing restrictions on US investment in Chinese companies involved in developing certain technologies with military and intelligence applications, such as quantum computing, networking, and AI. This order aims to prevent US investors from supporting these projects. The US is also considering additional funding limitations for those benefiting from US CHIPS funding.
Despite these restrictions and challenges, Chinese web and cloud providers are aggressively purchasing Nvidia GPUs to ensure they have access to AI accelerators. By securing a substantial number of GPUs, Chinese companies hope to mitigate potential disruptions caused by future restrictions on US-made technology. The race to develop fully homegrown Chinese chips capable of replacing American silicon continues, but for now, Chinese organizations are relying on modified GPUs to power their AI initiatives.
