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Chinese Internet Giants Rush to Acquire High-Performance Chips Amid Fears of US Sanctions

China-based internet giants, including Baidu, ByteDance, Tencent, and Alibaba, are reportedly scrambling to acquire high-performance chips needed for building generative artificial intelligence (AI) systems. These companies have placed orders totaling $5 billion, as fears of new export sanctions by the US drive the buying spree.

According to a report, Chinese firms have ordered $1 billion worth of A800 processors from US-based chipmaker Nvidia. These chips, which are expected to be delivered by the end of the year, are a weaker version of Nvidia's A100 chips designed for data centers and have slower data transfer rates. Additionally, a $4 billion order for graphics processing units (GPU) placed earlier this year is expected to be delivered in 2024.

The limited availability of Nvidia's A800 chips to Chinese companies may be a result of export restrictions imposed by the US last year. There are concerns that the Biden administration may impose further restrictions, intensifying the shortage of GPUs.

Chinese internet companies are stockpiling A800 chips to ensure access to them, fearing the potential impact of future export restrictions. The US has already announced a ban on investments into China's quantum computing, advanced chips, and AI sectors, set to take effect in 2024.

In response to the success of Microsoft-backed ChatGPT, Chinese firms are also rushing to develop their own large language models. ByteDance's small teams are working on generative AI products, including an AI chatbot called Grace. Baidu is developing its own ChatGPT-like project named Ernie Bot. Alibaba plans to integrate a large language model into its products, such as the online shopping platform Taobao and mapping tool Gaode Map.

The battle to acquire high-performance chips reflects the ongoing competition among Chinese tech giants in the field of AI development and showcases their ambitions to advance technology within their respective companies.

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