China's Tencent Outsmarts US Export Ban: Hoards AI Chips for Future!


China's Tencent Outsmarts US Export Ban: Hoards AI Chips for Future!
China's Tencent Outsmarts US Export Ban: Hoards AI Chips for Future! © Getty Images News/Annabelle Chih

Tencent, one of China's largest technology conglomerates, revealed its proactive strategy to counter the impact of US export restrictions on artificial intelligence (AI) technology. The company has amassed a significant inventory of AI chips, a move that reflects the growing tech rivalry between the United States and China.

Navigating Through Export Restrictions

Martin Lau, Tencent's president, informed analysts that the company had anticipated the US export restrictions and acted swiftly. By placing early orders for Nvidia's H800 chips, Tencent managed to build "one of the largest inventories of AI chips in China." This foresight allows Tencent to continue developing its generative AI model for at least a couple more generations.

In addition to stockpiling, Lau mentioned that Tencent is exploring new suppliers within China for training chips, signaling a strategic shift in response to the changing geopolitical landscape. This move comes after Nvidia disclosed that the US's new export restrictions had taken effect immediately in late October, earlier than anticipated.

A Pattern of Precaution in Chinese Tech

Tencent's approach mirrors a broader trend among Chinese tech companies preparing for disruptions caused by trade tensions with the US. Before facing severe US trade restrictions in 2020, Huawei, another tech giant from China, reportedly stockpiled a two-year supply of chips.

Similarly, the Center for Strategic and International Studies noted that China's top chipmaker, Semiconductor Manufacturing International Corporation (SMIC), has accumulated a significant number of machines and spare parts.

While Tencent remains confident that the US export ban will not immediately affect the development of its AI bot, Hunyuan, and AI capabilities, concerns linger about the long-term implications. Lau expressed worry over the company's ability to resell components to other customers and emphasized the need for efficiency in using AI chips.

“Going forward, we will have to figure out ways to make … the usage of our AI chips more efficient,” he stated, indicating a focus on retaining high-performance chips primarily for training their AI model.

Tencent's actions and the broader pattern among Chinese tech firms highlight the increasing importance of semiconductor technology in the global tech industry and the strategic maneuvers companies are undertaking in response to international trade policies.