China invests US$6.1 billion in data centre infrastructure amid surge in demand for AI chips

China has invested 43.5 billion yuan (US$6.1 billion) on a nationwide project to build eight computing hubs, according to a Xinhua report citing a senior Chinese official, as the US-China tech war over semiconductors and artificial intelligence (AI) rages on.

The direct investment from the Chinese government had also incentivised more than 200 billion yuan in additional money from other entities, including private capital, as of the end of June, according to Liu Honglie, head of China’s National Data Bureau, who disclosed the figure during a presentation at the Big Data Expo on Thursday.

The computing hubs have a total capacity of 1.95 million server racks, with about 1.2 million racks already mounted, Liu said at the expo, which was held in the southwest city of Guiyang, capital of Guizhou province. A rack is a frame designed to hold several computing servers.

China embarked on the so-called “east data, west computing” project in 2022, with plans to build eight computing hubs in the Beijing-Tianjin-Hebei area, Yangtze River Delta area, Guangdong-Hong Kong-Macau area, Guizhou province, Chengdu-Chongqing area, Gansu province, Ningxia and Inner Mongolia.

The government-backed project aims to build a nationwide information technology network whereby data centres in China’s Western inland would process the computing workload generated in its more densely populated eastern coast areas.

The global AI frenzy has significantly boosted demand for advanced graphics processing units (GPUs) in both the US and China. High-end GPU shipments are expected to grow by 55 per cent in 2025, according to Taiwan research firm TrendForce.

Huawei Technologies is one of the Chinese companies contributing to the colossal project. It operates computing clusters running on Ascend AI chips in 19 cities across China, including Beijing, Shanghai and Shenzhen.