Analysis US ban on Nvidia, AMD chips seen boost Chinese rivals

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By Jane Lanhee Lee and Stephen Nellis

SAN FRANCISCO (Reuters) – The U.S. ban on exports to China of Nvidia and AMD’s flagship artificial intelligence chips will create new business opportunities for domestic startups jockeying for a slice of China’s fast-growing data center chip market, industry executives and analysts told Reuters.

The ban is part of a longer effort by the US government to crack down on US contributions to Chinese artificial intelligence and high-performance computing, or supercomputing. Last year, US officials put seven Chinese supercomputing units on an economic blacklist, and last week they banned Nvidia and AMD’s chips from exports to China “to keep advanced technology out of the wrong hands.”

On Thursday, an independent group that measures artificial intelligence speeds published new data that may help support claims by little-known Chinese startup Shanghai Biren Intelligent Technology Co that its latest chip has surpassed the performance of one of the advanced chips banned by the US government.

The milestone is seen as an opening for Chinese domestic chip companies to service Chinese customers cut off from access to U.S. chips, experts said.

“The benchmarks are broadly representative of image processing and natural language processing, which are two fairly significant AI workloads,” said David Kanter, founder of MLCommons, the group publishing the findings. “That’s pretty impressive.”

The promising performance rankings come after years of funding and development by Chinese startups and venture firms, including several investors from the United States, to create domestic alternatives to Nvidia Corp and Advanced Micro Devices Inc chips.

The rise of AI chip startups in China could disrupt US plans to slow China’s development of computing tools needed for military applications such as designing nuclear weapons. These tasks often involve running high-precision computer simulations – something the Nvidia and AMD chips excel at.

Biren, founded by alumni of Chinese tech giant Alibaba and Nvidia, has publicly said it would focus on selling its BR100 chip to private data center and cloud customers. The company says it has no plans to sell to the military.

Jack Dongarra, a distinguished professor of computer science who helps direct the Top500 ranking of the fastest supercomputers, says he’s seen this scenario play out before. “The United States has embargoed Intel chips from going to certain places in China that are and were developing high-performance computers,” he said. “The result was that China designed its chips for its supercomputers.”

CCS Insight chip analyst Wayne Lam said Biren could have a “success story, having demonstrated this capability and now having this business opportunity fall on them”. He said Chinese computer groups will likely “have to reinvent their systems and figure out how to build to something they can get.”

Still, some analysts and U.S. chip executives say to gain AI market share, companies need more than just a fast chip. They need to build a software ecosystem for the chips that can compete with Nvidia’s software platform called CUDA, which dominates the AI ​​market.

“New Chinese companies in the space will have to prove they are reliable, can iterate on cutting-edge hardware… And then offer a compelling software ecosystem,” said Paul Triolo, senior vice president of China at strategy firm Albright Stonebridge Group.

Also active in developing Nvidia alternatives are Chinese firms such as Cambricon, Alibaba Group’s PingTouGe, Iluvatar CoreX, Denglin Technology, Moore Threads, Vastai Technologies and MetaX.

Data firm PitchBook shows that these top startups alone have raised $2.5 billion in recent years, including from Shanghai government-backed fund Shanghai Guosheng Group and Hillhouse Capital, which counts several US pension funds and Yale University as limited partners. Other investors include the Chinese units of big-name Silicon Valley venture capital firms such as Sequoia China and Lightspeed China Partners.

Those investments have raised concerns for some who are pushing to limit where U.S. capital can be invested abroad, said Matt Ocko, managing partner of Silicon Valley venture capital firm DCVC. His firm is a major investor in companies that work closely with the US defense and intelligence community. “It is not acceptable for large pools of US capital to finance AI chips and other PRC (Chinese) military technology that threaten US national security.”

(Reporting by Jane Lanhee Lee and Stephen Nellis Editing by Kenneth Li and Christopher Cushing)

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