Alibaba · China · Nvidia · Android · The Register
Alibaba Cloud is set to apply fewer Western chips, to boost its already major AI margins
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Cloudy AI is Chinese giant’s ‘most certain’ path to growth as e-commerce slows.
Key facts
- With its 45 percent growth, Alibaba Cloud’s AI offerings did far better, but its quarterly revenue of $7.14 billion is well behind AWS, Microsoft, and Google
- CEO Eddie Wu said some servers deliver cash for longer, and said machines acquired in 2018 and 2020, and packing the Nvidia V100 and A100 accelerators, “are still being used by customers at near full capacity
- Execs predicted Alibaba Cloud revenue will reach around $10 billion next quarter
- Alibaba thinks it can shorten the initial payback period for AI hardware to 2.5 years, because margins for AI services are increasing
Summary
Alibaba has revealed margins from its cloudy AI operation are rising so quickly it will be able to achieve return on investment for new hardware purchases faster than previously planned. Speaking on the company’s earnings call yesterday, CFO Toby Xu said the company runs its servers for five years, and that AI servers produce enough revenue to cover their costs in three years. Baidu says Chinese buyers want local AI chips due to ‘supply chain’ issues. China claims global chip leadership thanks to new legal definition of 'integrated circuits'.