Beyond the familiar Chinese Big Tech firms, a host of smaller companies have been scrambling to snap up Nvidia graphics processing units (GPUs) to develop their artificial intelligence (AI) products amid an escalating tech war between Washington and Beijing.
L&A Design, a Shenzhen-listed landscape designer, is just the latest non-tech Chinese company to tout its use of Nvidia GPUs. It said in a stock filing on Sunday that it is buying up to 128 units of Nvidia servers that contain high-performance GPUs for 435 million yuan (US$60.5 million) via a subsidiary. It did not specify the type of GPU it is buying.
The orders were placed on Monday with an intermediary called Shenzhen Runxin Supply Chain, and 64 servers are set to be delivered by Runxin before June 30, 2023 with the rest provided by the end of 2024, according to the filing.
L&A Design’s stock price in Shenzhen gained 20 per cent – the daily limit – on Monday as investors rushed to buy up its stock on the news.
Nvidia revenues soar as it warns of sales hit in China from US chip curbs
Nvidia revenues soar as it warns of sales hit in China from US chip curbs
Amid tougher US sanctions, California-based Nvidia tailored slower variants of its chips – the A800 and H800 – for Chinese clients, providing a window of opportunity for Chinese companies to stock up. However, the US government tightened its controls again in October this year, making it illegal for Nvidia to sell the A800 and H800 to China and threatened to ban any future workarounds.
Nevertheless, Chinese companies have been playing up their access to Nvidia chips, winning favour with some investors.
Prior to L&A Design, Lotus Health, a powdered flavour maker, said in September that it would pay 693 million yuan to H3C, a Chinese server maker, for 330 units of Nvidia H800 GPU-based servers via a subsidiary. The reported deal triggered a regulatory inquiry by the Shanghai Stock Exchange as the company had no prior experience in computing power.
Unexpected purchases by non-tech companies reflect the power of Nvidia, whose chips are considered the beating heart of the latest large language models (LLMs), determining to a large extent how powerful the model can be. Microsoft, Meta, Google, Amazon and Oracle are all big buyers of Nvidia products, with the chipmaker’s market value topping the US$1 trillion mark in June.
Although deep-pocketed big tech firms such as Tencent Holdings, Baidu, Alibaba Group Holding and ByteDance have been big Nvidia customers prior to the onset of tougher sanctions, it is clear smaller companies such as L&A Design have also been keen to get in on the act. However, analysts have warned that China’s ambition to become a strong AI nation will be damaged by the new US controls.
As a result of the October sanctions update, Nvidia has developed three new data centre GPUs – the H20, L20 and L2. However, US Commerce Secretary Gina Raimondo has warned that the US will take a dim view of any future workarounds.