“Chinese Chips”
Welcome to AI Collision 💥,
In today’s collision between AI and our world:
- Jack Ma is alive, and making chips
- 20% is a race to the bottom
- Is Alibab underappreciated?
If that’s enough to get the chips on the Chinese order, read on…
AI Collision 💥
The race to the bottom is on.
And, surprise surprise, it’s China that’s the driving force behind it.
It’s no secret that China is going big on AI development. To think it’d be sitting on its hands lamenting the bans on chip exports form the US would be a severe underestimation of its abilities.
I guess it’s like any major manufacturing base that can’t get its hands on the best tech but is more than capable of stealing the IP for it – just do it yourself.
I’ve written a little bit about that over the last few weeks, from the development and release of DeepSeek to the more recent look at its push to challenge ASML and even if there were Chinese stocks you’d be eyeing up for a portfolio.
The latest development in China’s push for chip manufacturing dominance comes as Jack Ma (founder of Alibaba and affiliate Ant Group) has been commenting on Ant’s AI-based future and its latest breakthrough in training AI and reducing the cost of the chips needed by around 20%.
Late last year he spoke about the future of Ant Group:
“Our generation is very lucky. We seized the opportunities of the Internet era,” said Ma, according to the report. “From today’s perspective, the great changes brought by the AI era in the next 20 years will exceed everyone’s imagination.”
He also said he was grateful for the experiences and challenges Ant had faced over the past few years. “It is these encouragements and criticisms that help Ant grow and mature,” he was quoted as saying.
Ant is saying it has cut costs on AI training by 20% – that’s a big shift for the entire global AI industry.
To put that into some perspective, Elon Musk’s Colossus AI super-cluster has around 100,000 Nvidia GPUs in it. Let’s say those are running at around $40,000 per GPU. That’s $4 billion for one AI data centre.
The ability to reduce the cost by 20% saves $800 million. Multiple that out for all the giant data centres stacked with AI chips and the numbers very quickly start to soar into the billions and will likely creep towards the trillions.
These kinds of breakthroughs then put serious pressure on US companies. That’s because Ant is reported to have used “China chips” from Alibaba and Huawei.
Ant said it could achieve the same results as it would with H800 chips from Nvidia (the scaled-back chips made for the Chinese market to satisfy export controls).
In short, this is a major step forward for China being wholly self-sufficient for its entire AI chip supply chain.
What this sounds like is that the AI wars (so to speak) are more about the domestic security of the AI chip supply chain. Like the domestic security of energy and domestic security of borders, it’s just another reason for major competing nations to onshore whatever they can to remain competitive in the fast-moving AI space.
No doubt the timing of this is no coincidence. We’re edging closer to President Donald Trump’s declared “Liberation Day” which is expected to unleash a new wave of tariffs on the world.
China is more or less saying to the world that if the US wants to close shop and punish you, check out what we can do, for less, achieving more, and we won’t slug you with punitive taxes just to get you to play nice.
Albeit I’m sure that would come with other caveats. However, it certainly looks like China might be taking the (claimed) nice guy route as the unpredictability of the US administration continues.
To me, this also puts Alibaba in a very interesting position from an investment view. As I commented the other day, the “Chinese Amazon” might not be the right way to look at this tech giant.
If it’s really making high-quality chips now, at reduced prices, maybe a company like Alibaba is the closer competition to Nvidia than anything that might come domestically.
With a market cap of $320 billion, it does seem to be the kind of stock that could unlock serious capital gain potential if the AI wars heat up, and it continues down this development path. Certainly one to think about.
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Boomers & Busters 💰
AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).
Boom 📈
- Samsung Electronics (KOR:A005930) up 7%
- Palantir (NASDAQ:PLTR) up 5%
- AMD (NASDAQ:AMD) up 5%
Bust 📉
- BigBear.ai (NYSE:BBAI) down 14%
- XPENG (NASDAQ:XPEV) down 8%
- Micron (NASDAQ:MU) down 6%
From the hive mind 🧠
- Reid Hoffman made his billions as the founder of LinkedIn. He’s now got a lot to say about AI, how we should think about it, look at it and use it in our lives.
- The speed at which AI improves and can complete tasks that would take humans weeks is kind of frightening. If this pace continues, and there’s no reason it can’t, then there will be a lot of work, tasks and jobs that AI will do that either help humans be more productive or make humans more redundant.
- Can AI help save the NHS? Or is it more likely that nothing can save the NHS, but at least AI can make the services better and more useful?
Artificial Polltelligence 🗳️
Weirdest AI image of the day
Tommy and Chucky discover Tesla Cybertrucks don’t work in the rain
ChatGPT’s random quote of the day
“One of my most productive days was throwing away 1,000 lines of code.”
— Ken Thompson
Thanks for reading, and don’t forget to leave comments and questions below,
Sam Volkering
Editor-in-Chief
AI Collision
Problem with China, Russia et al. is that time and time again they have been proven to have just stolen the IP they claim to have created. They don’t do it on their own merit.
Its hard to believe anything that “China” says.
It’s hard to believe anything that “America” says.
et al
I’d go as far as to say it’s hard to believe anything that anyone says anymore!
In the words of John Ruskin: “There is hardly anything in this world that some man cannot make a little worse and sell a little cheaper, and those people who consider price alone are this mans lawful prey.
It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”
Well worth remembering when companies who steal other peoples intellectual property build the product but don’t really understand the thinking and methodology of how it was created. Anyone recall the Russians building the Tupolev 144 Concordski from stolen schematics that never quite worked as it should and passengers were terrified to fly on.
” The bitterness of poor quality remains long after the sweetness of low price is forgotten” Benjamin Franklin.