Alibaba and Baidu Forced to Train AI Models on 2017 NVIDIA V100 GPUs Due to Sanctions

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Recent waves of U.S. sanctions are compelling Chinese technology companies to use outdated equipment for their AI model development. Companies like Alibaba and Baidu will likely need to locate new suppliers for producing their AI accelerators.

The intensified anti-Chinese sanctions by Washington may result in local tech companies having to deplete their stocks or train AI on older hardware. Moreover, tech giants like Alibaba and Baidu may face new obstacles in manufacturing their AI accelerators. These two companies have been developing their own accelerators for AI algorithms, making them leaders in the Chinese market. However, the performance of these components is high enough to fall under U.S. export restrictions. The chips they produce are manufactured by contractors, such as TSMC and Samsung, whose production processes incorporate American technologies. As a result, due to these American sanctions, Taiwanese and Korean companies will not be able to serve Chinese customers. Chinese semiconductor manufacturers, including SMIC, lag behind these suppliers by several generations.

NVIDIA will also be required to halt shipments of its H800 and A800 accelerators, which the company designed specifically to comply with Washington’s previous export control measures. This means that the Chinese technology sector will have to work with accelerators similar to the NVIDIA V100 model, which was released in 2017 and is no longer in production. It’s worth noting that services like OpenAI ChatGPT operate on more recent hardware. Companies in China working with AI have some reserves of these chips, but in the long term, training AI models here will become more expensive and labor-intensive compared to the United States. Equipment at the level of the NVIDIA V100 will at least double data processing costs, according to analysts cited by the Financial Times.

Over the past few months, Alibaba, Baidu, ByteDance, and Tencent ordered more than $5 billion worth of equipment from NVIDIA, but the majority of these orders have not been delivered. The supplier is running several months behind schedule, and Washington provided NVIDIA and its counterparts with approximately a month’s extension to fulfill orders for Chinese clients. Insiders suggest that sanctioned chips will continue to flow into the country through black market channels, but it is clear that there will not be enough to meet the demands of the country’s tech industry.

Author Profile

Martin Harris
I'm Martin Harris, a tech writer with extensive experience, contributing to global publications. Trained in Computer Science, I merged my technical know-how with writing, becoming a technology journalist. I've covered diverse topics like AI and consumer electronics, contributing to top tech platforms. I participate in tech events for knowledge updating. Besides writing, I enjoy reading, photography, and aim to clarify technology's complexities to readers.

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