Chinese AI Firms Plan Massive Domestic Data Centers With 100,000+ NVIDIA AI Chips — But Where Will the Chips Come From?

It is reported that China’s AI companies have put up a big ambition of installing a “hyperscale” level facility in the nation, utilizing more than 100,000 of NVIDIA’s AI chips.

China’s AI Firms Are Expected to Build 36 Data Centers, Mainly Utilize NVIDIA’s H100 & H200 AI Chips

Well, with nations across the globe racing to create AI infrastructure and achieve dominance in this segment, it seems like China is also pushing the pedals to get ahead, despite all the restrictions and trade barriers in place. A report by Bloomberg revealed that Chinese AI firms, along with the support of the state, are building a massive AI facility in Yiwu, China. Related tender documents and filings indicate that the parties plan to install over 115,000 of NVIDIA’s high-end AI chips in 36 data centers across the country’s western deserts, but the bigger question here is, how will Beijing acquire such compute power, with the US restrictions in place?

While the project plans are under development, this still marks one of China’s largest AI datacenter buildouts, considering the scale of chips being deployed across multiple facilities. And, while it is nowhere near what the US infrastructure is capable of, it does show that Beijing is making ground in this segment, by any kind of means it has access to. Interestingly, when Bloomberg asked about China’s data center projects in the region, none of the US sources were familiar with the development, suggesting that either the project was strictly confidential, or something that is still in the planning phase.

Now, the question is how China will access the chips it needs. The country is barred from getting chips from the US, so it would need to resort to other means, particularly through SEA nations like Malaysia and Singapore, which are rumored to have given Chinese engineers access to AI chips. Apart from this, China has a vast pool of H20 AI accelerators that is available to Chinese Big Tech organizations, so they might decide to leverage them in the buildouts, but Beijing still doesn’t have a consistent source of NVIDIA’s AI chips, and there is no solution by Team Green available for them as of now.

There is no current evidence on whether Chinese AI firms could get their hands on such a large number of chips, but development is still ongoing in Yiwu. Despite the barriers, China’s data center market is growing rapidly and is expected to be valued at 300 billion yuan in scale this year. The nation hasn’t switched to domestic alternatives such as those from Huawei for hyperscalers, and they are relying on what appears to be “trade loopholes” for computing needs, suggesting that the US export control isn’t completely effective for now.