China’s AI chips increase amid uncertainty over access to Nvidia H200

Production of Chinese chips could increase this year as executives at China’s biggest tech companies seek to push for more domestic technology, as reported by reports that US semiconductor giant Nvidia may return.

Wednesday, Internet giant tencent While suggesting China’s domestic chip production could increase this year, e-commerce giants alibaba We discussed how we are expanding our use of internally developed semiconductors.

The comments highlight how China has pushed for homegrown chips in a bid for self-sufficiency to power its AI ambitions in the absence of Nvidia’s technology due to export restrictions.

Tencent’s chief strategy officer James Mitchell said capital spending would increase “significantly,” particularly in the second half of the year, as more Chinese-designed chips become “available every month.”

Mitchell also said the supply of Chinese-designed graphics processing units (GPUs) will increase “gradually” throughout the year.

He also said that an increasing number of Chinese-designed chips are coming from “neighboring countries” as well as domestic manufacturing facilities.

China has a number of local chip players that have stepped up their activities by going public and launching products. moore thread, Meta X Huawei and Huawei are among the companies trying to fill the void left by Nvidia after it was blocked from selling chips to China more than a year ago.

This is supporting record profits for Chinese semiconductor companies.

Alibaba is designing its own AI chips and deploying them in data centers that power its cloud computing sector.

“T-Head’s proprietary GPU chips have achieved large-scale mass production,” an Alibaba executive said during an earnings call Wednesday. Alibaba talked about how its self-designed chips have advantages in an environment where access to semiconductors is difficult.

“In an environment where computing is scarce, this structural advantage will help our company increase revenue and improve gross margins,” said one executive.

Alibaba also hinted at the possibility of selling servers with its chips to companies building computing and data centers, or working with other companies to build those facilities, underscoring how the tech giant sees its growing role in China’s semiconductor sector.

Alibaba and Tencent’s comments came a day after Reuters reported on Thursday that the United States had given the green light to several Chinese companies, including Alibaba and Tencent, to buy Nvidia’s H200 chip, one of the most powerful GPUs on the market.

However, so far no H200 has been manufactured, Reuters added.

It is still unclear whether Nvidia actually received approval from the US government. “This is news to me,” Treasury Secretary Scott Bessent said when asked about the report by CNBC’s Joe Kernen.

“I know there’s been a lot of back and forth…and we’ll have to look at that. That’s the function of the Department of Commerce,” Bessent added.

Last year, there were several reports about the U.S. government giving Nvidia permission to ship certain chips to China, including the less powerful H20. However, some reports at the time suggested that China encouraged local companies to buy domestic substitutes.

Neil Shah, partner at Counterpoint Research, said more advanced chips will be needed as Chinese companies push forward with “agent AI,” the idea of ​​AI systems performing more complex tasks. That means Nvidia’s H200 products will be welcomed, he said.

“We’re seeing China’s AI roadmap pivot towards ‘domestic use’ of AI training infrastructure,” Shah told CNBC. But he added that the “race to agentic AI” has moved from “training to inference scaling at scale,” the process of actually running trained AI models.

“Chinese hyperscalers cannot afford to wait,” Shah said, adding, “With NVIDIA H200 being adopted in hybrid AI inference infrastructure based on Chinese and US chips, the timing is right to scale their infrastructure early.”