Tencent Searches For Local AI Chip Sources Post Supply Restrictions From US

JAKARTA - Chinese technology group Tencent Holdings announced on Wednesday 15 November that it would seek domestic sources for artificial intelligence (AI) training chips. This follows new steps by the United States to limit chip supplies to China.

Tencent president Martin Lau said in a decision by the US Government last month to ban the export of more AI chips to China would force the company to use existing chips more efficiently and search for domestically produced AI chips.

"We have to find ways to make our AI chip usage more efficient," he said, "And we will also try to find domestic sources for this training chip."

Lau's comments come as Chinese companies with artificial intelligence ambitions seek to overcome the growing export restrictions of AI chips from the United States to China.

Prior to this restriction, the US semiconductor giant, Nvidia traditionally dominated the AI chip market in China. However, now more and more Chinese technology companies are turning to domestic chip manufacturers such as Huawei Technologies for AI chip supply.

Reuters reported last week that Tencent's competitor Baidu had ordered 1,600 Ascend 910B chips from Huawei.

Lau said that Tencent had stored enough Nvidia chips to continue developing its AI model called Hunyuan "at least for generations to come". Therefore, new chip restrictions will not affect the development of Tencent's AI capabilities in the short term.

But Lau said the new rules will have an impact on Tencent's cloud services where the company sells computing power to clients.

"We feel that the ban on chips actually affects our ability to resell this AI chip through our cloud services," he said.

Lau said Tencent currently has one of China's largest AI chip inventoryes.

"One of the key things we did was we were the first to order an H800 chip [from Nvidia] and it allowed us to have a pretty good H800 chip inventory," he said.

Nvidia's H800 AI chip was developed specifically for China at the end of last year in response to previous restrictions from the US on exporting AI chips to China. However, the new rules announced last month also included the H800 chip.

Tencent said the best way to take advantage of the current stock of the H800 chip might only be to use them for the most crucial part of model AI development, namely model training.

"We're going to try to see if we can move most of the inference capabilities to lower-performance chips so we can store most of our high-performance AI chips for training purposes," Lau said.