No Chips, No Problem: China Is Dropping Cash Vouchers Worth $280K To Ramp Up Its AI Dreams

In a bid to support its artificial intelligence (AI) startups, China has announced a significant move. The country is offering “computing vouchers” to these companies, aiming to address the challenges posed by the U.S. chip restrictions.

What Happened: The Chinese government has taken a proactive step to aid its AI startups, which have been facing a shortage of crucial chips due to U.S. restrictions, the Financial Times reported on Monday. At least 17 city governments, including Shanghai, have promised to provide “computing vouchers” to help these companies deal with the rising costs of data centers. The vouchers, valued at $140,000 to $280,000, can be used to train and operate large language models (LLMs) for AI data center time.

This initiative comes as a response to internet companies with cloud computing services canceling contracts due to stricter U.S. controls. This has led them to reserve the majority of AI processors for internal use and important clients.

The Biden administration’s tightening of China’s access to critical AI chips has forced companies to stockpile, repurpose Nvidia NVDA gaming chips, or resort to the black market.

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Analysts believe that while the vouchers will address the cost barrier, they won’t solve the scarcity of resources. To further support its AI industry, Beijing is planning to roll out a subsidy program for AI groups using domestic chips. The country is also building an alternative to Big Tech’s data centers and cloud services, with a network of state-run data centers and online platforms established in the past year.

Why It Matters: The move by China to support its AI startups comes at a crucial time. The country is facing potential further restrictions on semiconductor exports from the U.S. and the Netherlands. This could exacerbate the chip shortage issue, making it even more critical for China to bolster its domestic AI industry.

Despite these challenges, Chinese AI startups are making significant strides. For instance, 01.AI, a relatively unknown AI startup, has raised $200 million from Alibaba and others. This funding has propelled it to the top of the AI rankings, showcasing the potential of Chinese AI startups in the global market.

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