US chip export ban is hurting China’s AI startups, not so much the giants yet

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Properly earlier than Washington banned Nvidia’s exports of high-performance graphic processing models to China, the nation’s tech giants had been hoarding them in anticipation of an escalating tech battle between the 2 nations.

Baidu, one of many tech companies constructing China’s counterparts to OpenAI, has secured sufficient AI chips to maintain coaching its ChatGPT equal Ernie Bot for the “subsequent yr or two,” the agency’s CEO Robin Li stated on an earnings call this week.

“Additionally, inference requires much less highly effective chips, and we consider our chip reserves, in addition to different alternate options, can be ample to help a number of AI-native apps for the top customers,” he stated. “And in the long term, having difficulties in buying probably the most superior chips inevitably impacts the tempo of AI improvement in China. So, we’re proactively searching for alternate options.”

Different deep-pocketed Chinese language tech firms have additionally been taking proactive measures in response to U.S. export controls. Baidu, ByteDance, Tencent and Alibaba collectively ordered round 100,000 models of A800 processors Nvidia to be delivered this yr, costing them as a lot as $4 billion, the Monetary Occasions reported in August. In addition they bought $1 billion price of GPUs which are scheduled for supply in 2024.

Such heavy upfront investments may simply deter many startups from coming into the LLM race. Exceptions do exist if the younger enterprise manages to safe good-looking investments rapidly. 01.AI, which was based in late March by distinguished investor Kai-Fu Lee, acquired a considerable variety of high-performance inference chips by means of loans and has already paid off its debt after elevating capital that valued it at $1 billion.

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With its reserve of GPUs, Baidu just lately launched the Ernie Bot 4, which Li claimed is “not inferior the least bit to GPT-4.”

Ranking LLMs is hard due to the sheer complexity of those AI fashions. Many Chinese language AI companies have resorted to rating boosting by diligently fulfilling the factors of LLM charts, however the effectiveness of those fashions when utilized to actual functions real-life remains to be pending judgment.

Smaller AI gamers, missing the money circulation to hoard chips, should accept much less highly effective processors that aren’t underneath U.S. export controls. Alternatively, they’ll await potential acquisition alternatives. Li expects that with a confluence of things, together with the shortage of superior chips, excessive demand for information and AI expertise, and big upfront investments, the business will quickly transition right into a “consolidation stage.”

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