China’s tech giants are moving away from Nvidia

Chinese tech giants are tearing themselves away from Nvidia after being backed into a corner by the White House.

Alibaba, Tencent, and Baidu have started moving their AI development onto Chinese-made chips, as Donald Trump’s new export restrictions slam the brakes on Nvidia’s sales to China.

These companies have no choice, as their remaining stock of Nvidia processors is drying up fast, and the next batch may never come. 

According to the Financial Times, the trigger came last month when Trump’s administration tightened export rules again. This time, it blocked Nvidia’s already weakened H20 chips, the only model the company had tweaked to barely stay legal under earlier restrictions set under Joe Biden.

Now that option’s dead too. Chinese firms are being forced to plan around a complete cutoff, with insiders saying their current Nvidia inventory might only carry them through to early 2026. And even if new chips get approved, they take three to six months to arrive … if they ever do.

Alibaba, Tencent, and Baidu test Chinese chips instead

Baidu’s head of its AI cloud division, Shen Dou, told analysts last week that his company is already experimenting with other chips. He said Baidu sees “domestically developed self-sufficient chips, along with increasingly efficient homegrown software stacks” as a future-proof base for their AI ecosystem.

Shen also said that their team is especially focused on finding chips that can take over inference tasks—basically, the part of AI that does the thinking after a model is trained.

Eddie Wu, who leads Alibaba, said earlier this month that his company is now “actively exploring diversified solutions to meet rising customer demand.” That means they’re testing replacements, knowing their reliance on Nvidia can’t continue.

At Tencent, Martin Lau told analysts they still have enough powerful chips to train models for “a few more generations,” but added they’re now being more cautious with how chips are used and said the company might “potentially make use of other chips” to handle future needs.

Beijing’s own security research arm is paying close attention too. The China Institutes of Contemporary International Relations, which works under the state security ministry, posted that while the US restrictions were damaging, they had led to more Chinese innovation in the AI chip sector. 

They specifically pointed to Huawei’s Ascend series, saying demand for those chips is rising fast. So far, buyers have mainly been big state-owned operations like China Mobile and industries like defense, finance, and health. But now, tech firms like Baidu and Alibaba are getting in line to grab whatever is available.

Huawei chips bring legal risk but growing demand

There’s one huge problem though. Washington is still watching Huawei closely. US authorities issued a warning this month saying that using Ascend chips anywhere in the world could lead to criminal charges. That’s why companies testing them are staying quiet, even though everyone knows what’s going on behind the scenes.

Still, analysts at GF Securities believe Nvidia might try to release another chip that fits the new US rules. They expect something around early July, and say it’ll likely be built on Nvidia’s Blackwell platform. But it won’t come with high-bandwidth memory, or HBM, which is a critical piece of fast data processing. It’s also unclear if it will have NVLink, which lets Nvidia chips communicate faster with each other.

Jensen Huang, Nvidia’s CEO, admitted during the last earnings call that there’s nothing on the table right now. “We don’t have anything at the moment,” Huang said, leaving companies like Alibaba and Tencent in limbo.

If they want to ditch Nvidia, they’ll have to rebuild their entire system around something else. The code they currently run is built on Nvidia’s CUDA software. Porting it to Huawei’s CANN platform takes months and usually requires help from Huawei engineers to make sure everything runs properly.

Huawei is trying to step up production, working with partners and even launching its own chip-making plant. But still, demand is already outpacing supply. 

Other Chinese chipmakers like Cambricon and Hygon are also being pulled into the ring. Baidu and Alibaba have even started building their own processors to make sure they don’t run out of options.

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