US chip export prohibition currently hitting China’s AI startups Harder than industry giants, proactive steps have also been taken by other wealthy Chinese IT businesses in reaction to U.S. export regulations
China’s IT behemoths had been stockpiling Nvidia’s high-performance GPUs even before Washington stopped the company from exporting them, fearing an intensifying tech war between the two countries.
During an earnings call this week, Robin Li, the CEO of Baidu, one of the major companies creating China’s OpenAI rivals, stated that the company has acquired enough AI processors to continue training its ChatGPT comparable Ernie Bot for the “next year or two.”
Additionally, he stated, “Also, inference requires less powerful chips, and we believe our chip reserves, as well as other alternatives, will be sufficient to support lots of AI-native apps for the end users,” he said. “And in the long run, having difficulties in acquiring the most advanced chips inevitably impacts the pace of AI development in China. So, we are proactively seeking alternatives.”
Proactive steps have also been taken by other wealthy Chinese IT businesses in reaction to U.S. export regulations. The Financial Times revealed in August that Baidu, ByteDance, Tencent, and Alibaba bought approximately 100,000 A800 processors from Nvidia to be delivered this year, at a total cost to them of up to $4 billion. In addition, they invested $1 billion in GPUs that will be delivered in 2024.
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Such large initial outlays would easily discourage many startups from competing in the LLM space. There may be an exception if the startup company is able to swiftly raise sizeable funding. 01.AI, a well-known investor created in late March, has already paid off its debt after raising $1 billion in funds. Through loans, it was able to purchase a significant number of high-performance inference chips.
Baidu recently introduced the Ernie Bot 4, which Li said is “not inferior in any respect to GPT-4,” using its reserve of GPUs.
Because these AI models are so complicated, rating LLMs is difficult. Numerous AI companies in China have turned to rank boosting by carefully meeting the requirements of LLM charts; nevertheless, it is still too early to tell if these models work well in practical applications.
Smaller AI players will have to make do with less powerful processors that are exempt from US export restrictions since they lack the cash flow to hoard chips. Alternatively, they could wait for possible purchase chances. Li predicts that the sector will soon enter a “consolidation stage” due to a number of issues, such as the dearth of sophisticated chips, the strong need for data and AI talent, and significant upfront investments.
