China AI chips ramp up as Nvidia H200 access unclear
China is focusing on large language models in artificial intelligence.
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Production of Chinese chips could increase this year as executives at the country’s biggest tech companies begin using more domestic technology, as US chip giant Nvidia reportedly may return.
Internet titan on Wednesday Tencent e-commerce giant suggests production of chips grown in China could increase this year Alibaba’s He discussed how he expanded the use of semiconductors he developed.
The comments underscore how, in the absence of Nvidia technology due to export restrictions, China is pushing domestically developed chips in its quest for self-sufficiency to power its AI ambitions.
china chip launcher
Tencent Chief Strategy Officer James Mitchell said the company will see a “significant increase” in capital spending, especially in the second half of the year, as Chinese-designed chips are rolled out “month after month.”
Mitchell also said the supply of Chinese-designed graphics processing units (GPUs) will “gradually” increase throughout the year.
He also said Chinese-designed chips are seeing greater supply from manufacturing facilities in China and “neighboring countries.”
This supported record revenue for Chinese chip companies.
Alibaba designs its own artificial intelligence chips that it deploys in data centers powering its cloud computing division.
“T-Head’s proprietary GPU chips have reached mass production at scale,” an Alibaba executive said on the company’s earnings call on Wednesday. Alibaba talked about how the chips it designed provide an advantage in an environment where access to semiconductors is difficult.
“In an environment of PC shortages, this structural advantage is positive for our revenue growth and gross margin improvement,” one executive said.
Alibaba also signaled that it could sell servers equipped with its own chips to companies building computing and data centers or build these facilities together with other companies, underlining how the technology giant sees China’s growing role in the semiconductor field.
Will Nvidia be welcomed?
Alibaba and Tencent’s comments came a day ago Reuters reported on Thursday that the United States has given the green light to several Chinese firms, including Alibaba and Tencent, to buy Nvidia’s H200 chips, one of the most powerful GPUs on the market.
However, Reuters added that no H200 has been built so far.
It’s still unclear whether Nvidia actually has US government approval. Asked by CNBC’s Joe Kernen about the report, US Treasury Secretary Scott Bessent said: “This is news to me.”
“I know there’s a lot of back and forth… and we’ll have to see. That’s a commerce department’s job,” Bessent added.
Last year, there were multiple reports that Washington had given approval to Nvidia to ship certain chips, such as the less powerful H20, to China. However, some reports during this time period suggested that China encouraged local firms to purchase domestic alternatives.
Neil Shah, partner at Counterpoint Research, said Chinese companies will need more advanced chips as they turn to “agent AI,” the idea of artificial intelligence systems that perform more complex tasks. He said this means Nvidia’s H200 will be welcome.
“We see the Chinese AI roadmap moving towards ‘domestic only’ with AI education infrastructure,” Shah told CNBC. But he added that the “race to Agent AI” has moved “from training to massive inference scaling,” the process of actually running trained AI models.
“Chinese hyperscalers cannot afford to wait,” Shah said, adding: “The timing is right for the adoption of NVIDIA H200 into what could be a hybrid AI inference infrastructure based on Chinese and US chips to scale the infrastructure sooner rather than later.”
