Chinese AI firms reportedly ration use of services due to chip shortage

Chinese tech firms are rationing the use of their AI services because a lack of computing power, caused from a shortage of chips, reports The Information.

One firm, the live-streaming platform Kuaishou, had to limit the number of people who could use the test version of Kling, its text-to-video model, to avoid running short of computing capacity. The company used Nvidia chips, like the A800, to train its model.

AI startup Moonshot AI, most recently valued at $3 billion, is also warning users of its popular chatbot that computing power may be insufficient during peak hours.

Alibaba, Baidu, and ByteDance—all of which offer large language model applications—are telling corporate customers that need heavy usage to wait in line, according to The Information.

Kuaishou, Moonshot AI, Alibaba and Baidu did not immediately respond to a request for comment. A ByteDance spokesperson said the company wouldn’t comment on “market rumors.”

U.S. chip controls have an effect

Chinese companies are rushing to create their own generative AI applications to get ahead in the country’s fiercely-competitive consumer internet sector. Yet companies running these applications will need access to processors that can power them.

The U.S. places strict export controls on the sale of AI-related chips, like those made by Nvidia, to China.

Chinese companies have previously warned that the export ban was affecting their business. Alibaba blamed U.S. export controls when it abandoned its plan to spin off its cloud computing unit last November. At the time, the e-commerce company said the restrictions “may materially and adversely affect” its ability to serve customers.

As non-Chinese firms scramble to get their hands on new Nvidia chips, Chinese companies are instead running through their stockpiled inventory, as Biden administration rules effectively cut off China’s access to high-end AI chips made by companies like Nvidia and Qualcomm.

While Nvidia and other chipmakers are working on new products that comply with U.S. rules, Chinese companies are reportedly not keen on these watered-down chips.

Chinese firms like Huawei are now working on developing domestically-produced AI chips, but it’s still uncertain whether the industry can make high-end semiconductors at scale. U.S. export controls also bar the export of advanced chipmaking tools to China, and Washington is reportedly pressing allies like the Netherlands and Japan to tighten controls further by halting maintenance services as well.