Tencent and Baidu, two of China's tech giants, are adapting to the US-imposed AI chip curbs by turning to domestic alternatives. Due to export restrictions, Nvidia's weakened chips designed for the Chinese market haven't gained much traction with these companies. Instead, they're increasingly relying on locally developed chips to power their artificial intelligence systems.
Huawei's Ascend 910B chip is gaining popularity, with capabilities comparable to Nvidia's A100 chip in certain tasks. China Telecom recently purchased Huawei AI servers worth $390 million, further solidifying Huawei's position in the market.
Tencent is pushing cloud services using its AI inference chip Zixiao, developed with deep learning startup Enflame, as a cheaper substitute for Nvidia's chips. This strategic move aims to reduce Tencent's reliance on foreign technology and mitigate the impact of US export controls.
Baidu has also placed orders for Huawei chips and is exploring alternative sources due to the US curbs. The company has a stockpile of AI chips that can sustain its Ernie large language model for the next two years, giving it some breathing room to adapt to the changing landscape.
The US export controls have boosted China's domestic AI chip development, with local companies like Huawei making significant progress. While Nvidia's revenue might not be immediately affected, the company could face a significant blow in the long term as Chinese companies adapt to domestic alternatives.
