Baidu’s $61.83M Huawei AI Chip Purchase Signals Shift from Nvidia

In a significant move in the world of artificial intelligence, Baidu, one of China’s leading AI firms, has placed an order for 1,600 Ascend AI chips from Huawei Technologies. This decision comes amid increasing US pressure, and it signals a shift in Chinese acceptance of Huawei’s products as an alternative to Nvidia’s. The AI industry is watching this development closely, as it may have far-reaching implications for the global AI market.

Baidu, known for operating the Ernie large language model (LLM), placed the order in August, prior to the introduction of new US regulations in October. These rules tightened restrictions on chip and chip tool exports to China, including those from US chip giant Nvidia. Baidu’s decision to order from Huawei appears to be a strategic move in anticipation of these restrictions.

The Ascend 910B AI chips ordered by Baidu are Huawei’s answer to Nvidia’s A100 chip. By October, over 60% of the order, approximately 1,000 chips, had been delivered to Baidu. The total value of the order is estimated at around 450 million yuan ($61.83 million), with plans for complete delivery by the end of the year.

While this order may seem small compared to the volumes traditionally ordered from Nvidia by top Chinese tech firms, its significance lies in the potential shift it signifies away from Nvidia. Baidu has long been a client of Nvidia and was not previously known to be a customer of Huawei for AI chips.

Despite Huawei’s Ascend chips being seen as less performant than Nvidia’s, they represent the most advanced domestic option currently available in China. This order for Ascend 910B chips could be seen as a preparation for a future where purchasing from Nvidia may no longer be an option.

Baidu and Huawei have been collaborating since 2020 to ensure compatibility between Baidu’s AI platform and Huawei’s hardware. In August, the companies announced plans to deepen the compatibility between Baidu’s Ernie AI model and Huawei’s Ascend chips.

Baidu has its own line of Kunlun AI chips, designed for large-scale AI computing. However, the company has primarily relied on Nvidia’s A100 chip to train its LLM. When US rules last year prevented Nvidia from selling its A100 and H100 chips to China, Nvidia introduced new A800 and H800 chips as alternatives for Chinese customers, including Baidu. However, the October regulations have now blocked Nvidia from selling these chips to China as well.

Industry analysts speculate that these US restrictions could create an opportunity for Huawei to expand its $7 billion domestic market. Huawei has been subject to US export controls since 2019, but this order from Baidu is a positive sign for the company’s technological advancements.

The Chinese government is investing heavily in its domestic semiconductor industry in an attempt to catch up with foreign counterparts and replace foreign technology with domestic alternatives. Huawei’s progress in chip development has been noteworthy, especially with the surprise unveiling of a new smartphone in August featuring internally developed processors with advanced semiconductor technology.

In another sign of Huawei’s comeback, Reuters reported in September that HiSilicon, Huawei’s in-house chip design unit, had started shipping newly developed Chinese-made processors for surveillance cameras to clients in 2023.

This latest AI news paints an intriguing picture of the future of the AI industry. As AI text generators and AI images generators become more sophisticated, the need for advanced chips will only increase. Baidu’s decision to order from Huawei may be a sign of things to come as companies navigate the complex landscape of international regulations and technological advancements.