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China’s tech giants feel the pain from US ban on AI chips, outline plans to minimise impact on cloud computing business
- Alibaba said revenue from its AI training model and related services may be constrained in the foreseeable future due to the new export rules
- Tencent president Martin Lau said it will make the most of its AI chip supply by offloading inference work to lower-performance chips
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Che Panin Beijing
Chinese tech giants, including Alibaba Group Holding and Tencent Holdings, are feeling the pinch of the latest US chip export controls, but have plans to minimise the impact, according to comments made by their respective CEOs in third-quarter earnings calls this week.
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E-commerce titan Alibaba and Tencent, the social media and video gaming giant, both warned investors of the impact on their cloud computing business from stepped-up US export controls, which restrict certain advanced semiconductors and chip-making equipment from being sold to China.
During its third-quarter earnings call on Thursday, Alibaba said it cancelled plans for a full spin-off of its cloud computing unit due to “uncertainties” caused by US restrictions on certain artificial intelligence (AI) chips. Alibaba owns the South China Morning Post.
Alibaba said revenue from its AI training model and related services may be constrained in the foreseeable future owing to the new US export rules. Separately, Tencent said on its earnings call on Wednesday that the restrictions will affect its ability to “lease these AI chips” to customers through its cloud services.
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