Chinese firms lag behind US peers in AI development ‘by two years’, Alibaba chairman Joe Tsai says

Group co-founder Joe Tsai said US chip export restrictions to China have ‘definitely affected’ mainland tech firms, including Alibaba
He predicted that ‘China will develop its own ability to make’ advanced semiconductors, like those from Nvidia, over the long term

Artificial intelligence

Kelly Le

Published: 7:30pm, 5 Apr 2024

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China is trailing the United States in the global race to lead artificial intelligence (AI) development by two years, according to Alibaba Group Holding co-founder and chairman Joe Tsai, as mainland companies continue to struggle with technology restrictions imposed by Washington.

“China is somewhat behind, obviously,” Tsai said, citing how ChatGPT creator OpenAI has leapfrogged the rest of the tech industry in AI innovation, in a podcast interview published on Wednesday with Nicolai Tangen, chief executive of Norges Bank Investment Management – the branch of Norway’s central bank that is responsible for managing the world’s largest sovereign wealth fund.

Tsai pointed out that China’s tech companies are “possibly two years behind” the top AI firms in the US. He said US export restrictions that bar Chinese companies’ access to advanced semiconductors, such as the highly sought-after graphics processing units (GPUs) from Nvidia, have “definitely affected” tech firms on the mainland, including Alibaba. Hangzhou-based Alibaba owns the South China Morning Post.

“We’ve actually publicly communicated [that] it did affect our cloud business and our ability to offer high-end computing services to our customers,” he said. “So it is an issue in the short run, and probably the medium run.”

05:03

How does China’s AI stack up against ChatGPT?

E-commerce giant Alibaba last November cancelled the spin-off of its Cloud Intelligence Group, asserting that the plan “may not achieve the intended effect of shareholder value enhancement” because of the uncertainties brought about by expanded US export restrictions on advanced chips.

The Biden administration last week updated sweeping export controls it implemented in October, making it harder for the mainland to have access to advanced AI processors, semiconductor-manufacturing equipment and even laptop computers built with those chips, according to a Reuters report. The revised rules took effect on April 4.

The candid assessment made by Tsai in the interview reflects the concerns of China’s broader technology industry on how these tightened export controls are dampening local AI innovation, making the country less competitive in this important field.

Tsai indicated that Chinese tech firms are continuing to look for ways to mitigate the impact of these restrictions, including sourcing advanced processors from other suppliers and stocking up on available chips in the market.

Updated US chip controls raise demand in China for Nvidia’s graphics card

Chinese internet search giant Baidu, for example, last year ordered AI chips from Huawei Technologies, according to a Post report in November that cited two people familiar with the matter.

“I think in the next year or 18 months, the training on large language models (LLMs) can still go ahead, given the inventory that people have,” Tsai said. LLMs are the technology used to train ChatGPT and similar generative AI systems.

“There’s more high [performance] computing that’s required for training, as opposed to the applications, what people call inference,” he said. “So on the inference side, there are multiple options. You don’t need to have as high-power and high-end chips as the latest model from Nvidia.”

He predicted that “China will develop its own ability to make these high-end GPUs” over the long term.

Beijing urges breakthroughs in chips and quantum computing to command future

“AI is essential,” Tsai said. “Having a good large language model developed in-house is very, very important because it helps our cloud business.”

Tsai, who took over as Alibaba’s chairman last September, said at an event in October that it was the goal of Alibaba Cloud, which remains mainland China’s leading cloud infrastructure services provider, to turn AI into a huge productivity tool, “especially for small and medium-sized enterprises”.

He said 80 per cent of China’s technology companies and half of companies involved in LLM development run on Alibaba Cloud.

Cloud computing technology enables companies to distribute over the internet a range of software and other digital resources as an on-demand service, just like electricity from a power grid. These resources are stored and managed inside data centres.