Following a new U.S. directive banning the use of Huawei Technologies AI chips globally, Tencent Holdings TCEHY said it has sufficient stockpiles of high-end chips, like Nvidia Corporation's NVDA H20, to continue training large language models for "a few more generations."
What Happened: "So it's a very dynamic situation," Tencent president Martin Lau told analysts on a conference call on Wednesday, reported Nikkei Asia. "We just … have to manage the situation," not only in a compliant way, but also by making sure our AI strategy can still be executed.
The U.S. Bureau of Industry and Security this week barred the use of Huawei chips for AI, even outside American borders. This comes as Washington tightens export controls amid growing concerns over military applications of AI technology.
Lau noted that while GPU supply is tight, Tencent has prioritized internal use, focusing first on revenue-generating AI products like advertising and content recommendations, with model training following.
He added that Tencent is optimizing software for inference, effectively doubling GPU capacity, the report noted.
Why It's Important: Tencent's first-quarter earnings beat analyst expectations, with revenue rising 13% year-over-year to 180 billion yuan ($24.9 billion), driven by strong AI-enhanced ad performance and gaming growth.
Previously, it was reported that Chinese tech giants, including Tencent, Alibaba Group BABA and ByteDance increased their orders for Nvidia’s H20 chips to meet rising demand for affordable AI solutions, particularly from emerging startups like DeepSeek.
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Since January, Nvidia has reportedly received H20 chip orders totaling around $18 billion. However, in March, Chinese server manufacturer H3C cautioned about a potential shortage of these chips.
Last week, it was reported that Nvidia is redesigning its H20 AI chip for the Chinese market, with plans to release the revised version as soon as July. The decision followed a notification from the Donald Trump administration informing Nvidia that the original H20 chip would require an export license.
Nvidia received an impressive growth score of 95% from Benzinga Edge Stock Rankings. Click here to see how it compares to other leading tech giants such as Alibaba and Tencent.
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