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Chinese companies are now turning to Nvidia products that comply with US export controls, even as they work to build alternatives that could eventually reduce their reliance on the American chipmaker, according to a report by The Financial Times. The purchases highlight how difficult it has been for Beijing to reduce its dependence on American technology while rapidly expanding its AI infrastructure. Chinese chipmakers, including Huawei, Alibaba, Baidu and Cambricon, are increasing production, but supply has struggled to keep pace with demand from technology companies developing AI models and data centres.
Nvidia’s CUDA software remains a factor for Chinese companies
Huawei is expected to produce 1.6 million AI chips this year, while Alibaba and Baidu’s chip divisions are expected to manufacture a combined 1 million units. Cambricon is projected to produce around 300,000 chips, according to people familiar with the companies’ plans. Their combined capital expenditure this year could more than double to approximately RMB 700 billion, or $104 billion, according to people familiar with the matter. Tencent has signed an agreement with Oracle to lease 100,000 GPUs across data centres in Southeast Asia, while ByteDance and Alibaba are pursuing similar arrangements, according to the report.
Meanwhile, Chinese companies are investing in domestic processors. The demand for computing power has increased as Alibaba, ByteDance and Tencent invest in AI models, data centres and agentic AI tools. The shortage is also prompting Chinese AI developers to secure computing capacity overseas. The developments underline the challenge facing both Washington and Beijing. US restrictions aim to limit China’s access to advanced computing technology, while Beijing works to build a self-sufficient chip industry. Yet rising AI demand and the continued importance of Nvidia’s hardware and software show why Chinese tech companies haven’t been able to move away from the American chipmaker as quickly as intended.
Industry insiders estimate that available AI chip supply could reach 3.5 million units this year, including around 1 million manufactured overseas. However, total demand is expected to exceed 5 million units. Nvidia is preparing another workstation processor, the RTX Pro 5500, which is expected to offer higher performance than its existing products available in China. Chinese companies have already indicated orders exceeding 2 million units, with shipments potentially beginning towards the end of this year, according to two people familiar with the move.
However, Chinese regulators are examining whether demand for the processor is justified.