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Thanks to US curbs, Chinese internet giants are seeking suppliers outside of Nvidia

Nov 07, 2023 - qz.com
Chinese internet giant Baidu has started buying AI chips from Shenzhen-based Huawei, a shift from its longtime supplier, US chip maker Nvidia. This follows the US tightening restrictions on tech exports to China, including Nvidia chips. In response to these restrictions, Chinese companies are seeking out non-US suppliers. Despite this, Nvidia's chips remain the most powerful on the market, and the company has received over $5 billion in orders from China for its A800 and A100 chips through 2024.

The US Commerce Department has been implementing restrictions on Nvidia chip imports to China since October 2022, with the aim of curbing China's ability to produce advanced chips for defense technology. Nvidia has tried to bypass these restrictions by releasing pared-down or alternative versions of its chips. However, new rules in October 2023 immediately restricted the export of these chips as well. Despite these challenges, Nvidia's data center business in China has grown significantly, generating over $10 billion last quarter.

Key takeaways:

  • Baidu, a longtime customer of US artificial intelligence chip maker Nvidia, is now buying AI chips from Shenzhen-based Huawei due to tightening US restrictions on tech exports to China.
  • The US Commerce Department has been implementing restrictions on Nvidia chip imports to China since October 2022, affecting several of Nvidia's chips.
  • China accounts for 20-25% of Nvidia’s data center business revenue, and Nvidia's AI chips hold a 70% market share globally.
  • The chief executives of Nvidia and rival AMD, Jensen Huang and Lisa Su, are distant relatives with roots in Taiwan.
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