From Bloomberg via Canada's Financial Post, July 9:
A Bloomberg investigation finds China is building data centers in the remote Xinjiang region to fuel its AI ambitions — and looking to buy 115,000 Nvidia chips to power them.
In a remote part of China’s northwestern Xinjiang region, dozens of data centers rise from the desert. A Bloomberg analysis of investor and tax documents and company filings found Chinese companies plan to buy more than 115,000 high-tech Nvidia chips — chips the US has banned from being exported to China – to power these centers, which could then be used for training AI models.
On today’s Big Take Asia Podcast, host K. Oanh Ha talks to Bloomberg’s Andy Lin and James Mayger about the story, and what it means for China’s AI master plan.
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Here is a lightly edited transcript of the conversation:
K. Oanh Ha: Earlier this year, our colleague James Mayger took a trip to the middle of the desert in the remote region of Xinjiang, China.
James Mayger: Xinjiang is the western third of China, basically. It borders Mongolia, Kazakhstan, Uzbekistan and Yiwu, where we went on this trip. It’s situated in a river valley. It’s got these lovely snow-capped mountains overlooking the town. It really was a stunningly beautiful place, but very hard to get to.
Ha: James was there on a lead generated by Bloomberg’s data journalism team: That a handful of Chinese companies were building some 40 data centers across the region and planned to power them with tens of thousands of Nvidia chips.
Chips that the US banned from being exported to China in 2022.
Yvonne Man: China has criticized the US’ move to expand restrictions on its access to semiconductor technology, saying that they will harm supply chains and the world economy…
Andy Lin: They want to build an AI industry that can go head to head with the US.
Ha: Bloomberg data reporter Andy Lin led the team’s investigation.
Lin: In modern warfare, AI is playing a larger role. So, the US is worried about China developing the AI capacity with developing their high-end military as the aim.
Ha: Since the Biden administration’s initial restrictions on advanced AI chips, the US has tightened export controls, putting them at the center of tensions with Beijing.
Just last week, Bloomberg learned of plans by the Trump administration to further restrict the shipments of AI chips to Thailand and Malaysia – part of an effort to prevent them from being potentially smuggled into China.
Lin: So by building these data centers and building up the computing power, they aim to build a local domestic AI industry that can go head to head with OpenAI, Alphabet, Amazon, or Meta in the US.
Ha: This is the Big Take Asia from Bloomberg News. I’m Oanh Ha.
Every week, we take you inside some of the world’s biggest and most powerful economies, and the markets, tycoons and businesses that drive this ever-shifting region.
Today on the show — China’s AI ambition rises from the desert.
Ha: China is fast becoming a world leader in artificial intelligence. It’s one of the top consumers of semiconductors. And as DeepSeek’s latest model shows, Chinese companies are hungry to create top-tier AI technology to rival international competitors.
But Andy says the US government’s export controls have created a real problem for China, by limiting its access to Nvidia’s prized semiconductors.
Lin: Nvidia is the industrial standard for any AI training operations. So for example, OpenAI, the most famous AI companies in the world use Nvidia chips for training the ChatGPT models. And whenever you want to build a sophisticated AI model, you need to use a lot of Nvidia chips. So, the Nvidia chip is sought after across the world for all the AI development because every country wants their own AI industry.
Ha: Andy says China’s ultimate goal is to have its own source of advanced AI chips – ones that are on par with Nvidia’s offerings.
For now though, Nvidia’s semiconductors are the best product on the market – and Chinese companies are eager to access them.
Lin: Since the US introduced these export controls, I heard sources in China saying they are having a hard time getting large volumes of Nvidia chips for the operations. I think this slows China’s access to these chips, but not stop them from getting them outright.
Ha: The US government has no official consensus on how many restricted Nvidia chips are currently in China. Two senior Biden officials estimated that China had around 25,000 chips. But most of the people Bloomberg spoke to say there isn’t an agreed-upon estimate.
That’s why when Andy found documents laying out the volume of Nvidia chips that companies hoped to obtain for these data centers, he was surprised....
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