Chinese tech giants are reportedly training their artificial intelligence (AI) models offshore to utilize Nvidia’s (NVDA) most advanced chips. Specifically, e-commerce giant Alibaba Group (BABA) and TikTok-owner ByteDance (PC:BYTDC) have started conducting large language model (LLM) training in data centers located in Southeast Asia to circumvent the U.S. ban on Nvidia’s chips.
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The step comes as the U.S. set up strict export restrictions on advanced semiconductors and technology to maintain its lead in the AI race. The news was first reported by the Financial Times, citing people with direct knowledge of the matter. However, a key challenge remains that Chinese firms cannot move private data out of China. This means AI model training with local client data must stay within China to comply with regulations and protect privacy.
China Leverages Nvidia Chips Offshore
There has been a noticeable increase in the training of Chinese AI models in data centers across Singapore and Malaysia, particularly after the White House’s abrupt ban on Nvidia’s H20 AI chips. Chinese tech giants are leasing large data center clusters equipped with high-performance Nvidia chips outside China, typically owned by non-Chinese firms. The data centers in Singapore and Malaysia have seen surging demand, matching the capabilities of their large U.S. counterparts.
Meanwhile, Chinese companies are using home-grown chips for model inference, since it requires less computational power than training. The key difference between training and inference is that training involves teaching AI models using large datasets, whereas inference applies these trained models to generate predictions and respond to user inputs.
Beyond training, Chinese tech companies are also using data centers offshore to serve overseas customers as they vie to grow their share in the global cloud market. They’re also expanding data center access in regions like the Middle East.
Chinese AI Models Compete Globally
Chinese companies are rapidly developing advanced AI models, with some even ranking among the top globally. Alibaba’s Qwen model series and ByteDance’s Doubao models have gained significant attention in the AI space and are increasingly adopted by international developers, especially as open-source models.
However, DeepSeek stands apart in this strategy. The company prefers training its models domestically, having secured Nvidia GPU (graphics processing unit) clusters before the U.S. tightened restrictions. DeepSeek also collaborates with domestic chip maker Huawei, hosting Huawei engineers at its Hangzhou office to optimize and develop China’s next-generation AI chips. This partnership aims to advance Huawei’s semiconductor and AI software technology within China.
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