China’s Baidu replaces AI chip supplier Nvidia with Huawei in strategic move

Baidu, a major Chinese tech company, has decided to diversify its supply-chain strategy by procuring AI chips from Huawei, in a move described by some as shifting away from US tech giant Nvidia. According to reports Baidu has ordered 1,600 of Huawei Technologies’ 910B Ascend AI chips for 200 servers. The order was placed in August in anticipation of the October export restrictions on US AI chips and chip manufacturing devices to China, including from Nvidia.

Why does it matter?

Baidu is a long-time client of Nvidia, along with its local counterparts Alibaba and Tencent, but not of Huawei. The order is seen as a sign that the tension with the US is pushing Chinese acceptance of Huawei’s offerings as an alternative to Nvidia’s. Baidu’s move is a strategic decision to prepare for the possibility that Nvidia’s chips might not be available in the future. This development suggests that Chinese tech companies are exploring alternatives in the face of increasing uncertainties in the advanced semiconductor supply chain. Huawei’s Ascend chips, while still inferior to Nvidia’s products performance, represent one of the most sophisticated locally available alternatives. The US export rule created an opportunity for Huawei to grow its $7 billion home market and display its technological advances as Beijing invests massively in its semiconductor industry. The aim is to catch up with overseas rivals and encourage state-owned companies to substitute foreign technology with domestic alternatives.
In August, Huawei was the center of attention when, despite US sanctions, it unveiled a new smartphone with cutting-edge processors using advanced chip technology.