China’s Internet Giants are in a frenzy to buy high-performance Nvidia Chips vital for building generative artificial Intelligence Systems. They have placed orders worth $5bn, fueled by fear that the US would impose new export restrictions.
According to people familiar with the situation, Baidu, ByteDance Tencent, and Alibaba placed orders for $1bn worth of A800 processors to be delivered in this year. Two people with Nvidia confirmed that the Chinese groups also ordered a further $4bn of graphics processing units for delivery in 2024.
The A800 is an weakened version Nvidia’s A100 GPU designed for data centres. Export restrictions placed by Washington in an attempt to stifle Beijing’s technology ambitions last year have limited Chinese tech companies to only buying A800s. These GPUs are slower than the A100s.
Nvidia GPUs are the most popular computing devices amongst the biggest tech companies in the world. They provide the computing power needed to develop large language AI models.
Chinese internet groups have been stockpiling the A800 chips out of fear that the Biden Administration is considering new export restrictions which would include even Nvidia’s weaker chips. They also fear a GPU shortage due to the overwhelming demand.
Baidu’s employee, who refused to be identified, said that without the Nvidia chips they could not continue training any large language models.
After the success of ChatGPT launched by Microsoft-backed OpenAI, eight months ago, companies are now developing their own large language models.
According to two sources close to the company, ByteDance employs a number of small teams to work on various AI products. One such product is an AI chatbot named Grace. It’s currently being tested internally.
ByteDance, which licensed OpenAI’s ChatGPT, tested a generative AI for its social media application TikTok in the first half of this year. The feature was named TikTok Tako.
According to two employees who have direct knowledge of this matter, ByteDance has already stocked up at least 10,000 Nvidia graphics cards in order to meet its ambitious goals. The company also said that it had ordered almost 70,000 A800 processors to be delivered in the next year. This is worth $700 million.
Alibaba intends to integrate all of its products, including its online-shopping platform Taobao, and its mapping software Gaode Map, into its large-language model. Baidu has its own ChatGPT project called Ernie bot, which is a generative AI-based chatbot.
Baidu, ByteDance and Tencent declined to comment. Nvidia stated in a press release: “Cloud providers and consumer internet companies invest billions of dollar in data center components every year. They often place orders months in advance.”
According to employees of Chinese tech companies, earlier this year, when AI excitement was growing, the majority of Chinese internet giants only had a few thousand chip in stock, which could be used to build large language models. Since then, the demand for these chips has increased.
One Nvidia distributor said that the price of the A800 has increased by over 50%.
Tencent Cloud released in April a new cluster of servers — computing power that others can rent — with the Nvidia H800 graphics processor, a Chinese-adapted version of Nvidia’s latest H100 model, which is capable to power large language models, autonomous driving, and scientific computing.
Alibaba Cloud also received thousands H800 chips. According to two people familiar with Alibaba, many customers are already asking for cloud services powered by the chips in order to replicate ChatGPT.
ByteDance offers cloud computing devices that are stocked with Nvidia A800 and Nvidia A100 chips. In June, it launched a platform for companies to test different large language models.
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