Chinese officials have reportedly urged domestic tech giants to prioritize purchasing locally-made AI chips over foreign options like Nvidia's, as per a report by The Information. Companies such as Alibaba, Baidu, ByteDance, and Tencent have been advised to reduce their reliance on foreign-made chips and instead opt for a balance between local and international AI chips for their new data centers.
While the directive has not been strictly enforced, it remains uncertain if non-compliant companies will face penalties. The National Development and Reforms Commissions, Ministry of Industry and Information Technology, and the mentioned tech giants have not responded to requests for comments on the matter.
Nvidia, a key player in the AI chip market, has been developing specialized offerings for China, including the H20, L20, and L2 GPUs designed to comply with US sanction rules. China represents a significant market for Nvidia, accounting for 19% of its data center chip revenue in the last fiscal year.
Nvidia's CEO has expressed concerns over potential market restrictions, emphasizing the importance of the Chinese market for the technology industry. The company's efforts to cater to Chinese demands could face setbacks with the new directive.
Geopolitical tensions between the US and China have posed challenges for tech companies like Nvidia and Apple. Apple, for instance, has been diversifying its supply chains away from China by investing in Vietnamese suppliers and exploring opportunities in India.
Experts suggest that the tech industry is moving towards a 'two tech stack divide,' where countries like the US and China are increasingly isolating their tech ecosystems from each other. This trend underscores the complexities faced by companies navigating global political dynamics.
