China’s internet giants have rushed to buy billions of dollars of high-performance chips and graphics processing units (GPUs) from Nvidia needed to create artificial intelligence systems.
Baidu, Tencent, Alibaba and Bytedance, the owner of TikTok, have place orders worth $1 billion, the Financial Times reported on Wednesday.
They have sought acquire about 100,000 A800 processors from the US chipmaker to be delivered this year, the FT said, citing multiple people familiar with the matter.
The Chinese groups had also purchased a further $4 billion worth of graphics processing units to be delivered in 2024, the report said.
A Nvidia spokesperson would not elaborate on the report but said that “consumer internet companies and cloud providers invest billions of dollars on data centre components every year, often placing orders many months in advance.”
The White House moved on Wednesday to start banning some US investments in certain sensitive technologies in China, and require government notification of other investments, but said investment rules would take time before they take effect.
Biden signs executive order
The report comes as President Joe Biden on Wednesday signed an executive order directing the Treasury officials to regulate certain US investments in semiconductors and microelectronics, quantum computing and artificial intelligence.
Along with Biden’s order, Treasury issued an advance notice of proposed rulemaking, which will allow companies and investors time to comment before it moves forward with a formal notice of proposed regulation. That would allow for further public comment, before Treasury can finalize the new regulations.
Experts said the whole process could take many months, pushing enactment of the new regulations well into 2024 – a presidential election year.
That suggests orders allegedly placed by the Chinese tech giants could proceed without impact from the latest move by the White House, unless further limits are put imposed.
The Biden administration issued a sweeping set of export controls last October designed to freeze China’s semiconductor industry in place while the US pours billions of dollars in subsidies into its chip industry.
However, it was reported in May that the US moves to slow the development of China’s artificial intelligence (AI) industry were having very little impact on the Chinese military and technology sector.
Modified A800 chip
Nvidia offered the modified A800 processor in China to meet export control rules after US officials asked the company to stop exporting its two top computing chips to the country for AI-related work.
The White House has warned for weeks that the US would narrowly prohibit certain US investments in sensitive technology in China and require government notification of funding in other tech sectors.
Nvidia’s finance chief said in June that restrictions on exports of AI chips to China “would result in a permanent loss of opportunities for the US industry”, though the company expected no immediate material impact.
Baidu, ByteDance, Tencent and Alibaba did not immediately respond to requests for comment.
- Reuters with additional editing by Jim Pollard