- Major Chinese tech companies are bulk-ordering Nvidia’s H100 and A100 chips before possible renewed US export controls
- The buying spree exposes China’s ongoing reliance on foreign semiconductor technology despite massive domestic investments
What happened: Frenzied purchases ahead of policy shift
Chinese technology firms are scrambling to acquire Nvidia’s advanced AI chips following indications the U.S. may temporarily ease export restrictions. According to The Star’s report, companies including Alibaba, Tencent and Baidu have placed urgent orders, concerned about future supply constraints.
The high-performance processors are crucial for developing AI systems, with no Chinese-made alternatives currently matching their capabilities according to The South China Morning Post. As reported by Reuters, the surge in demand is creating secondary market shortages and driving up prices globally, with some chips selling at 50% premiums.
Also read: US pressures Allies not to cooperate with China on chips
Also read: US may allow Nvidia to export advanced AI chips to Saudi Arabia, Semafor reports
Why it’s important
The buying frenzy underscores China’s strategic vulnerability in semiconductor supply chains, despite billions invested in domestic alternatives like Huawei’s Ascend chips. While government policies mandate use of local processors, the performance gap continues forcing reliance on U.S. technology.
Geopolitical tensions surrounding AI development are intensifying, with U.S. controls aimed at limiting China’s military applications. However, critics contend the restrictions mainly slow progress while costing American firms revenue. The situation risks bifurcating global AI development into separate Chinese and Western technological ecosystems.
