(Yicai) Aug. 11 -- Internet and cloud service providers spend billions of US dollars a year on data center equipment, often placing orders many months in advance, Nvidia told Yicai after a report said Chinese internet giants have ordered USD5 billion of its high-performance artificial intelligence chips.

“Baidu, ByteDance, Tencent and Alibaba have made orders worth $1 billion to acquire about 100,000 A800 processors from the US chipmaker to be delivered this year,” the Financial Times reported yesterday, citing multiple people familiar with the matter.

“The Chinese groups had also purchased a further $4bn worth of the graphics processing units to be delivered in 2024,” according to two people close to Nvidia, the FT added.

GPUs are generally recognized as a scare product, and supplies will remain tight in next one to two years, a developer of a large language AI model told Yicai.

The rush by China’s web giants to buy high-performance Nvidia chips is also being driven by concerns over tougher sales restrictions being brought in by the US government in the future, according to experts, as confirmed orders are generally not affected by new exports controls. 

Baidu, Alibaba Group Holding, iFlytek, and other large Chinese technology firms have launched dozens of LLMs on the world this year, and most of them use Nvidia's GPUs to train them.

Twenty percent to 25 percent of Nvidia’s data center business revenue comes from the Chinese market, according to its figures. In the first quarter, the California-based company had USD4.3 billion of sales in the segment, which includes AI and other computing chips.

Editors: Xu Wei, Peter Thomas