Chinese Tech Giants Buy Nvidia GPUs from ByteDance as Export Restrictions Tighten
Tencent Holdings and Alibaba Group have bought graphics processing units (GPUs) from ByteDance, which reportedly stockpiled about 100 billion yuan ($13.7 billion) worth of chips, according to business news outlet Caijing. ByteDance has officially denied these claims, stating the information is "untrue."
Tencent purchased approximately 2 billion yuan worth of GPUs in the first quarter, primarily Nvidia's H20 chips. These acquisitions aim to support artificial intelligence (AI) development, including Tencent's ChatGPT-like application Yuanbao.
Alibaba acquired GPUs from ByteDance for similar AI development purposes, the report stated. ByteDance allegedly makes less than 10 percent of its total computing power inventory available for sale, generating revenue for its cloud computing unit, Volcano Engine.
The transactions occur as demand for computing power rises due to rapid AI adoption across China's tech sector. US export restrictions have made access to advanced semiconductor technologies more challenging for Chinese companies.
Nvidia's H20 chip was until recently the most powerful AI processor the company could legally sell in China under US restrictions. These restrictions prevent exporting Nvidia's most advanced technology on national security grounds.
This month, Nvidia announced it now requires approval to export H20 GPUs, further limiting Chinese access to these chips. Chinese firms reportedly ordered at least $16 billion worth of Nvidia's H20 chips in the first quarter, according to tech news outlet The Information.
Many orders were for an upgraded version integrating high-bandwidth memory used in Nvidia's Blackwell series. These transactions reflect how Chinese tech companies are adapting to growing limitations on accessing advanced AI hardware.
The chip trade comes amid broader economic tensions between China and the US. Recently, Chinese Premier Li Qiang proposed collaboration with Japan to counter US tariff policies, as both nations face new trade barriers from the Trump administration's recent protectionist measures.
