Before Washington’s ban on Nvidia’s exports to China, the country’s tech giants stocked up on high-performance graphic processing units in anticipation of an escalating tech war between the two nations.

Baidu, a tech firm building China’s counterparts to OpenAI, has secured enough AI chips to train its ChatGPT equivalent Ernie Bot for the “next year or two,” said the firm’s CEO Robin Li.

“Inference requires less powerful chips, and we believe our chip reserves will be sufficient to support lots of AI-native apps,” he said. “Having difficulties in acquiring the most advanced chips could impact the pace of AI development in China, so we are proactively seeking alternatives.”

Other Chinese tech companies like Baidu, ByteDance, Tencent and Alibaba have taken proactive measures in response to U.S. export controls. They collectively ordered around 100,000 units of A800 processors from Nvidia, costing them as much as $4 billion, and also purchased $1 billion worth of GPUs scheduled for delivery in 2024.

Upfront investments could deter startups from entering the AI race, but exceptions exist if the business secures investments quickly. 01.AI, founded by investor Kai-Fu Lee, acquired a substantial number of high-performance inference chips through loans and has already paid off its debt after raising capital.

With its reserve of GPUs, Baidu recently launched the Ernie Bot 4, which Li claimed is “not inferior in any respect to GPT-4.”

Rating LLMs is tricky due to the complexity of these AI models. Many Chinese AI firms have resorted to ranking boosting, but the effectiveness of these models in real-life applications is still pending judgment.

Smaller AI players, lacking the cash flow to hoard chips, will have to settle for less powerful processors not under U.S. export controls, or await potential acquisition opportunities. Li expects the industry to soon transition to a “consolidation stage” due to factors like the scarcity of advanced chips and high demand for data and AI talent.

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