Chinese companies are ditching Nvidia Corp.’s advanced accelerators in favor of domestic silicon, underscoring how tensions with the US are reshaping the AI infrastructure buildout and propelling Beijing’s ambitions to substitute American technology.
Executives in the country say they’ll allocate 46% of their budget for artificial intelligence accelerators to domestic products over the next 12 months, up from 30% today, according to a Bloomberg Intelligence survey released on Tuesday. In addition, 80% of executives said their total infrastructure spending is running over-budget this year, mostly because of the high cost of AI-related projects.
China’s biggest AI infrastructure builders and their key suppliers — Tencent Holdings Ltd., Alibaba Group Holding Ltd. and Huawei Technologies Co. — are best-positioned to take advantage of the shift. AI accelerators produced by Hygon Information Technology Co. and Cambricon Technologies Corp. were also being evaluated by a large pool of respondents to the survey.
“China’s drive to substitute locally made AI-semiconductors for foreign ones is making progress, which is likely to benefit domestic markers such as Huawei and Hygon,” said the report, which surveyed 60 executives at Chinese software, finance, manufacturing and retail companies.
While Nvidia’s products remain popular, the Santa Clara-based firm’s market share is expected to shrink as its H20 chips, which Beijing has urged its tech firms not to use, become harder to find and local firms take over, according to the survey.
China is allocating roughly 2 trillion yuan ($294 billion) to build data centers across the country in the next five years, a government-led initiative to expand use of AI in sectors from healthcare to city management. At least 80% of core technologies, such as chips, will be supplied by domestic companies, Bloomberg News reported.
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But a global memory chip shortage is likely to cap the growth of Chinese AI firms like Semiconductor Manufacturing International Corp. with ChangXin Memory Technologies Inc. poised to reap the benefits. The bottlenecks are shifting from sheer computing power to securing supply of high-bandwidth memory chips that support rapid data transfer, according to the report.
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