Tencent gears up for the future of AI with hoarded NVIDIA GPUs and seeks Chinese alternatives

Chinese companies, such as Tencent, have announced that they have stockpiled large quantities of NVIDIA graphics processors (GPUs) in order to be prepared for several generations. However, they are also planning to increasingly switch to domestic solutions in the future. According to Reuters, Tencent has said that it has recognized the potential impact of new U.S. restrictions that could limit access to NVIDIA’s powerful H800 and A800 AI GPUs. In a quarterly report for the third quarter, Tencent announced that they have enough equipment from NVIDIA to train their customized “Hunyuan” model for several generations. For a period of time, the company will have no impact on its “working model” and will continue to develop its existing AI-based resources. Nevertheless, Tencent plans to switch to domestic products in the future.

Tencent is not immune to the new US sanctions. The company fears that its ability to sell advanced cloud services could be affected. This shows just how entrenched Tencent is in the Chinese market, particularly in cloud computing, where its AI GPUs are critical to the industry. With a dominance of over 90% in the Chinese market, the recent US ban will have a significant impact on the growth of local industries and slow down the pace.

We will have to figure out ways to make the usage of our AI chips more efficient. And we will also try to look for domestic sources for these training chips

-Tencent’s President Martin Lau

There are rumors that NVIDIA may introduce more Hopper GPUs for the affected markets. However, the continuous disruptions have worried Chinese companies to a greater extent and they are looking for alternatives. Tencent joins companies like Baidu and other Chinese firms in the desire to find “in-house” solutions to counter the US influence on the markets. The most promising alternative appears to be Huawei’s Ascend AI chips. The flagship model achieves about 80% inference and 70% training performance compared to NVIDIA’s A100 accelerator. Tencent plans to use domestic equipment for “lower priority” tasks to diversify its product portfolio.

We’ll try to see whether we can offload a lot of the inference capability to lower-performance chips so that we can retain the majority of our high-performance AI chips for training purposes.

It remains to be seen how the market will develop, as Chinese tech companies and their AI solutions are now the only alternative for China’s huge domestic market, which has a growing demand for chips. It is possible that AMD and NVIDIA will be squeezed out of regional AI markets if sanctions are further tightened under the new Biden administration.

Source: Reuters