US Blacklisting Strengthens China’s Push for Local Alternatives in AI Development
In recent developments, the US has added a major reseller of NVIDIA processors to its export blacklist, thereby cutting off Chinese companies’ access to one of the country’s largest distribution channels for these processors. This move by the US strengthens its efforts to curb China’s artificial intelligence (AI) development. Additionally, it pushes more Chinese companies to seek out local alternatives.
The US Entity List now includes four Chinese companies that are accused of assisting China’s military in acquiring AI chips. These companies were reportedly involved in providing AI chips to China’s military modernization programs. This action by the US has not been well-received by China, with the Chinese Ministry of Commerce calling the sanctions “abusive” and accusing the US of attempting to weaponize export controls.
Sintonholy, a prominent NVIDIA data center product provider in China, has felt the impact of the blacklisting. With its franchise rights intact, Sintonholy has been a trusted distributor of NVIDIA products in China for years. However, the US ban on exporting high-end A100 and H100 graphics processing units (GPUs) to China has forced Sintonholy to shift its focus to selling domestic chips instead of NVIDIA products.
In response to the ban, NVIDIA has developed new replacements for its China-based clients, including the H20, L20, and L2. These alternatives aim to meet the demand for AI training capabilities in China. However, without access to NVIDIA’s sought-after A100 GPUs, Chinese companies like Sintonholy are turning to local alternatives.
One such alternative is Huawei’s Ascend 910B AI chips, which Sitonholy now distributes among its data center solutions. In various tests, Huawei’s 910B has performed at 70 percent of NVIDIA’s A100 level. This performance level makes it a viable option for Chinese companies seeking AI capabilities.
The impact of the blacklisting on Sintonholy’s operations is still uncertain. It remains unclear if NVIDIA will fulfill orders placed through Sintonholy, should the company be blacklisted. Despite this uncertainty, China remains committed to ensuring its industrial and national security. As part of this commitment, China has accelerated its efforts to substitute foreign chips and software with domestic products.
Huawei’s home-grown hardware and software solution, Harmony OS, plays a crucial role in creating an ecosystem for Chinese-made products. By relying on domestic solutions, China aims to reduce its dependence on foreign technology and strengthen its own capabilities.
In a similar vein, Chinese foundry Semiconductor Manufacturing International Corporation (SMIC) defied US sanctions by producing a 7-nanometer-grade mobile system-on-a-chip for Huawei’s 5G smartphone last year. This defiance highlights China’s determination to overcome restrictions imposed by the US.
Overall, the US blacklisting of a major NVIDIA reseller has significant implications for China’s AI development. It not only pushes Chinese companies to seek local alternatives but also accelerates China’s efforts to reduce its reliance on foreign technology. As tensions between the US and China continue to escalate, it is important to monitor how these developments shape the landscape of AI innovation and competition between the two nations.