Chinese artificial intelligence companies are embarking on an ambitious project to construct ‘hyperscale’ data centers within the country, aiming to utilize more than 100,000 NVIDIA AI chips. According to a report by Bloomberg, these firms, with backing from the Chinese government, are building a significant AI facility in Yiwu, China, and have plans to establish 36 data centers primarily leveraging NVIDIA’s H100 and H200 chips in the arid western deserts.
As countries worldwide compete to advance their AI infrastructure, China’s efforts exemplify its determination to assert itself in this domain, despite existing trade restrictions. Documentation related to the project suggests an installation of over 115,000 high-performance AI chips. However, this raises a pertinent question: How will China obtain such a substantial computing power in light of U.S. export controls?
While the plans are still in the development phase, this undertaking represents one of the largest AI data center expansions in China to date, showcasing the scale of chip deployment across various facilities. Although China’s capabilities currently lag behind those of the United States, this initiative indicates that Beijing is determined to advance its position in the AI sector by any available means. Notably, when Bloomberg inquired about these developments, U.S. sources seemed unaware of the project, hinting at its possibly confidential nature or ongoing planning.
The pressing issue remains how China will source the necessary chips. With U.S. restrictions preventing direct access, it may need to turn to networks in Southeast Asia, particularly in Malaysia and Singapore, where Chinese engineers are reportedly gaining access to AI chips. Additionally, Chinese tech giants could utilize their available pool of H20 AI accelerators, though a reliable source of NVIDIA chips has yet to materialize, and NVIDIA has not provided a viable solution to China.
As it stands, there is no definitive indication that Chinese AI companies can secure the vast number of chips required for these facilities. Nonetheless, with ongoing developments in Yiwu, the data center market in China is expanding rapidly, projected to reach a value of 300 billion yuan this year. Despite the challenges, the nation has not transitioned to domestic alternatives, such as those offered by Huawei for hyperscale needs, continuing to exploit what appears to be ‘trade loopholes’ to fulfill its computing requirements, indicating that U.S. export controls may not be entirely effective at this time.
