Chinese tech giants ByteDance, Alibaba (BABA, Financials), and Tencent (TCEHY, Financials) rushed to secure nearly one million H20 AI chips from Nvidia (NVDA, Financials) before U.S. export restrictions kicked in earlier this month, Nikkei Asia reported Wednesday.
The companies spent more than $12 billion on the chips, according to the report, aiming to build up a year's supply before the new rules took effect. The H20 chips, designed to comply with earlier U.S. curbs, are a lower-powered version of Nvidia's H100 and are widely used in China for AI inference tasks.
ByteDance was reportedly the biggest buyer, with Alibaba and Tencent also placing large orders. The urgency reflects China's growing need for AI computing power, fueled by demand for services like Tencent's WeChat-integrated DeepSeek.
Nvidia said earlier this month it expects a $5.5 billion revenue hit in the first quarter due to the export restrictions. Still, its stock rose 2% on Tuesday. Tencent shares climbed 3% and Alibaba gained 5.36% in Hong Kong trading.
As access to U.S. chips narrows, Chinese firms are looking at alternatives such as Huawei's Ascend processors and exploring workarounds, including offshore subsidiaries. The rush highlights the growing divide between Washington and Beijing over control of next-generation tech.
