Covering Disruptive Technology Powering Business in The Digital Age

Written by:Martin Dale Bolima, Tech Journalist, AOPG.

China’s leading technology companies, including Alibaba, Tencent, and ByteDance, have reportedly ordered more than USD $5 billion worth of NVIDIA chips to boost their Artificial Intelligence (AI) capabilities, the Financial Times reported on Tuesday.

The orders, which were placed over the past year, reflect the growing demand for high-performance computing hardware in China, which is seeking to become a global leader in AI and cloud computing—and is already making massive strides on both fronts.

NVIDIA, the world’s largest maker of graphics cards, has benefitted considerably from the surge in demand for its chips, which are used to power everything from gaming consoles to self-driving cars and, yes, large AI projects.

According to the Financial Times, citing multiple sources with knowledge of the orders, Alibaba, Tencent, and ByteDance each ordered about USD $1 billion worth of NVIDIA chips, translating to about 100,000 A800 processors for each company. Other Chinese tech firms, such as Baidu, JD.com and Meituan, also placed large orders for NVIDIA chips. The Financial Times also reported that the same Chinese companies had also purchased approximately USD $4 billion worth of GPUs to be delivered in 2024.

An NVIDIA spokesperson was tight-lipped when asked about the transactions but did say that “consumer Internet companies and cloud providers invest billions of dollars on data centre components every year, often placing orders many months in advance.”

It should be noted that NVIDIA is offering only the A800 processor in China because US officials had earlier asked the chipmaker to refrain from exporting its two top computing chips—including the groundbreaking H100 GPUs—to the Mainland for AI-related projects.

These bulk, billion-dollar orders also come amid rising tensions between China and the US over technology and trade issues. The US, for example, had earlier imposed sanctions on several Chinese tech companies, including Huawei and SMIC, restricting their access to advanced chips and equipment. China has responded by investing heavily in its domestic semiconductor industry and developing its own chip designs.

The Financial Times report also comes on the heels of US President Joe Biden signing an executive order that prohibits US tech firms from investing in sensitive technology in China, while also requiring them to notify the US government in case they are funding other tech sectors.

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