China is encouraging its tech giants to opt for locally-produced AI chips instead of those from Nvidia, as per a report by The Information. This move aims to reduce reliance on foreign-made chips and boost the domestic chip industry.
Chinese Tech Giants Directed to Prioritize Local AI Chips
Major companies like Alibaba, Baidu, ByteDance (parent company of TikTok), and Tencent have been advised to decrease their expenditure on foreign-made chips, particularly Nvidia's offerings. The directive suggests that these tech giants should aim for a balance between locally-produced and foreign AI chips for their upcoming data centers.
Strict Enforcement and Potential Penalties
Although the directive hasn't been strictly enforced yet, it remains unclear whether non-compliant companies will face any penalties for not adhering to the guidelines. Representatives from China's National Development and Reforms Commissions, Ministry of Industry and Information Technology, and the four tech giants mentioned did not respond to requests for comments from The Information.
Nvidia's Concerns and Market Impact
For Nvidia, a leading chip manufacturer, the Chinese government's directive poses a significant challenge. Despite efforts to offer specialized products tailored for the Chinese market, the company may face setbacks due to this new development.
Geopolitical Implications for Tech Companies
Nvidia's experience underscores the complex challenges faced by companies amid US-China tensions. As countries like China and the US continue to erect barriers in their tech industries, companies like Apple are diversifying their supply chains to mitigate risks.
Apple, for instance, has been investing in Vietnamese suppliers and exploring alternatives to its reliance on Chinese manufacturing. The evolving geopolitical landscape is reshaping the global tech industry, prompting companies to adapt to new realities and navigate geopolitical uncertainties.
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By: ktan@businessinsider.com (Kwan Wei Kevin Tan)
Title: China Urges Tech Giants to Buy Local AI Chips Over Nvidia: Report
Sourced From: www.businessinsider.com/china-asking-tech-giants-ditch-nvidia-chips-and-buy-local-2024-5
Published Date: Tue, 14 May 2024 07:07:21 +0000
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