China’s cloud companies reportedly consider local alternatives over Nvidia’s downgraded AI chips

Nvidia faces pushback from Chinese cloud companies, including Alibaba Group and Tencent, over its lower-powered AI chips designed to comply with tightened US export rules, the WSJ reports. These companies are reportedly ordering fewer chips than initially planned and are shifting orders to local alternatives, like Huawei’s Ascend 910B chips. Nvidia, which historically derives about a fifth of its revenue from China, is struggling to balance US regulatory demands and Chinese clients’ needs. Analyst Frank Kung from tech-research firm TrendForce predicts that Chinese cloud companies will reduce their sourcing of high-end AI chips from Nvidia from 80% to 50%-60% within the next five years. Nvidia’s latest H20 chips reportedly increase costs for Chinese customers because they need more to “simulate the processing power they got from Nvidia’s previous chips.”

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Online journalist Matthias is the co-founder and publisher of THE DECODER. He believes that artificial intelligence will fundamentally change the relationship between humans and computers.

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