Chinese tech giants Alibaba and Baidu have begun using their own chips to train artificial intelligence models, a move that could reshape the country’s AI industry and challenge Nvidia’s dominance, according to a report from The Information.
Sources told the outlet that Alibaba has been running smaller AI models on its in-house chips since early this year, while Baidu is testing its Kunlun P800 chip on new versions of its Ernie AI model.
Both companies declined to comment when contacted by Reuters.
The shift is a notable change in China’s AI landscape. For years, Chinese firms have relied heavily on Nvidia’s advanced processors. But with Washington tightening export restrictions on cutting-edge AI chips, Beijing has pushed local companies to adopt homegrown technology.
That doesn’t mean Nvidia is out of the picture. Both Alibaba and Baidu still use its chips for their most advanced projects. Nvidia’s H20 processor, the most powerful chip it can legally sell in China, remains stronger than most Chinese alternatives, though it falls short of the company’s flagship H100 and Blackwell series.
Still, Alibaba’s Zhenwu chip is now considered competitive with the H20, according to employees familiar with the technology.
The trend could further hit Nvidia’s business in China, where it has already struck a deal with former President Donald Trump to secure export licenses in exchange for 15% of H20 sales revenue.
Last month, Nvidia CEO Jensen Huang said talks with the White House over selling a scaled-down version of its next-generation chip to China are ongoing and will take time.
