Tencent and Alibaba grab ByteDance’s Nvidia stockpile in AI power play
Tencent Holdings and Alibaba Group Holding have acquired a significant number of Nvidia’s H20 graphics processing units (GPUs) from ByteDance, valued at around 2 billion yuan, as US restrictions on advanced semiconductor technologies tighten.
According to a report by Caijing (via South China Morning Post), ByteDance had previously stockpiled approximately 100 billion yuan (US$13.7 billion) worth of Nvidia’s H20 chips. The GPUs were primarily purchased by Tencent to support the development of artificial intelligence (AI), including its ChatGPT-like application Yuanbao. Alibaba also acquired GPUs from ByteDance for similar purposes.
ByteDance has denied the report, stating that the information is “untrue.” However, it is known that the company makes less than 10% of its total computing power inventory available for sale, generating revenue for its cloud computing unit, Volcano Engine.
The demand for computing power has surged due to rapid AI adoption and stricter US export restrictions, limiting Chinese companies’ access to advanced semiconductor technologies. Nvidia’s H20 chip, although slower than the H100 and next-generation Blackwell chips, was until recently the most powerful AI processor Nvidia could legally sell in China.
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Nvidia recently announced that it now requires approval to export H20 GPUs, further restricting access to its advanced tech. Chinese firms, including ByteDance, Alibaba, and Tencent, ordered at least US$16 billion worth of Nvidia’s H20 chips in the first quarter, with many of these orders being for an upgraded version that integrated the high-bandwidth memory used in Nvidia’s Blackwell series.
The acquisition of Nvidia’s GPUs by Tencent and Alibaba highlights the growing demand for AI computing power in China, driven by the need to develop and implement AI technologies despite US export restrictions.