China’s chip industry has made significant strides in developing advanced semiconductors capable of powering 5G smartphones. However, it has yet to achieve the capability to produce chips powerful enough to run AI applications. This reliance on imported chips, restricted by a US ban, is now putting China’s tech sector at a disadvantage in the race to dominate AI.
Chinese tech companies are rationing their AI services due to a lack of computing power, a consequence of the ongoing chip shortage. According to The Information, the situation is forcing companies to limit their AI functionalities to conserve computing capacity.
| Company | Service Affected | Details |
|---|---|---|
| Kuaishou | Text-to-Video Model (Kling) | Limited number of users to avoid shortage of computing power |
| Moonshot AI | Chatbot | Warns users about insufficient computing power during peak hours |
| Alibaba, Baidu, ByteDance | Large Language Model Applications | Corporate customers advised to wait in line for heavy usage |
One of the firms impacted is the live-streaming platform Kuaishou, which had to restrict the number of people accessing the test version of Kling, its text-to-video model. This move was necessary to prevent running out of computing capacity. Kuaishou relies on Nvidia chips, such as the A800, to train its model.
Similarly, AI startup Moonshot AI, recently valued at US$3 billion, has been warning users of its popular chatbot that computing power might be insufficient during peak hours.
Major tech giants Alibaba, Baidu, and ByteDance, all of which offer large language model applications, are advising corporate customers needing heavy usage to wait in line, as reported by The Information. The shortage of high-end chips has made it difficult for these companies to meet the demands of their AI services.
- Kuaishou: Limited access to AI services
- Moonshot AI: Warning users about potential shortages during peak times
- Alibaba, Baidu, ByteDance: Advising corporate customers to wait for heavy usage
Kuaishou, Moonshot AI, Alibaba, and Baidu did not immediately respond to requests for comments. A ByteDance spokesperson stated that the company would not comment on “market rumors.”
Chinese companies are racing to develop their own generative AI applications to stay competitive in the fiercely-contested consumer internet sector. However, running these applications requires processors capable of supporting their operations.
The US has placed stringent export controls on the sale of AI-related chips to China, including those made by Nvidia. Chinese companies have previously warned that these export bans were impacting their business operations. For instance, Alibaba cited US export controls as a reason for abandoning its plan to spin off its cloud computing unit last November. At the time, the e-commerce giant mentioned that the restrictions “may materially and adversely affect” its ability to serve customers.
As non-Chinese firms scramble to secure new Nvidia chips, Chinese companies are depleting their stockpiled inventory. The Biden administration’s rules have effectively cut off China’s access to high-end AI chips manufactured by companies like Nvidia and Qualcomm. While Nvidia and other chipmakers are developing new products that comply with US regulations, Chinese companies are reportedly not enthusiastic about these less powerful versions.
Huawei and other Chinese firms are now working on producing domestically-developed AI chips. However, the industry’s ability to manufacture high-end semiconductors at scale remains uncertain. Additionally, US export controls not only bar the export of advanced chipmaking tools to China but also reportedly push allies like the Netherlands and Japan to halt maintenance services further, complicating China’s efforts to become self-sufficient in high-end chip production.
- China’s tech sector is facing significant challenges due to a shortage of high-end chips, exacerbated by US export controls.
- Chinese companies are rationing AI services and warning users about potential shortages.
- The reliance on imported chips continues to put Chinese tech firms at a disadvantage in the AI race.
- Efforts to develop domestic AI chips are ongoing but face significant obstacles, including restrictions on advanced chipmaking tools.
The ongoing chip shortage and the US-imposed export controls are creating substantial hurdles for China’s tech sector, particularly in the realm of AI development. As Chinese companies strive to develop their own AI capabilities, the lack of high-end chips and restrictions on essential manufacturing tools pose significant challenges. The future of China’s AI ambitions hinges on overcoming these obstacles and achieving self-sufficiency in advanced chip production.
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