Chinese web giant Tencent can’t buy all the GPUs it wants • The Register

Chinese language net big Tencent’s capital expenditure is slowing and the corporate expects it would decelerate additional because of its lack of ability to purchase all of the GPUs it needs.

Tencent is a sprawling conglomerate whose messaging and e-commerce apps have over a billion month-to-month customers and are ubiquitous components of contemporary Chinese language life. The corporate’s video games are fashionable all over the world, and its video platforms appeal to enormous audiences and promoting income. The corporate’s public cloud has a ten % share of the Chinese language market. The corporate has invested closely in AI to energy its companies and in its earnings announcement reported the tech is “benefitting us in enterprise areas resembling advert focusing on and sport engagement, in addition to in effectivity enhancement areas resembling coding, and sport and video manufacturing.”

Comparable firms like Meta, Google, Amazon, and Microsoft report comparable outcomes from adopting AI after which say they’ll obtain even higher enterprise outcomes by ramping their spending on AI infrastructure – which already prime $10 billion 1 / 4 – for the subsequent few years.

Tencent, against this, reported Q3 capex of RMB13 billion ($1.9 billion), down 31 % in comparison with the earlier quarter and 23 % year-over-year.

On the corporate’s earnings name, execs mentioned capex will fall additional nonetheless, because of “a change when it comes to AI chip availability” and “provide chain constraints sourcing GPUs.”

The corporate mentioned it has all of the GPUs it wants for its personal operations however is experiencing “restricted influence” to income at its public cloud as a result of it doesn’t all the time have sufficient accelerators to hire to its purchasers.

Whereas Tencent’s capital expenditure fell, its income and revenue rose.

Q3 income reached RMB 192 billion ($27 billion), a 15 % year-over-year enchancment and 5 % higher than Q2. Gross revenue improved by 19 %, year-over-year.

Tencent didn’t supply predictions for future income, so it’s laborious to say if its difficulties shopping for GPUs will make it more durable for the corporate to develop and ship AI companies. On its earnings name, execs talked about work on improved giant language fashions that Tencent will use to energy its AI choices, suggesting they’re unconcerned that procurement issues will dent its ambitions.

That is likely to be as a result of different Chinese language firms are quickly creating GPUs that Tencent thinks will ultimately serve its wants – though the corporate’s prediction of falling short-term capex suggests these accelerators gained’t be simple to return by for some time. Or maybe, like its native rival Alibaba, Tencent has discovered intelligent methods to use GPUs more efficiently.

Regardless of the motive for Tencent’s capex, its admission of provide chain strife will go down nicely in Washington as successive US administrations have felt it finest to not permit American tech firms to promote their finest AI accelerators to China on grounds that they’ll assist Beijing to modernise its navy.

The US earlier this 12 months added Tencent to its checklist of “Chinese language navy firms”, an outline the net big protested as a result of its foremost actions are associated to social media and leisure. ®