(Feb 11): China’s top chipmaker has warned that breakaway spending on artificial intelligence chips is bringing forward years of future demand, raising the risk that some data centres could sit idle.
“Companies would love to build 10 years’ worth of data centre capacity within one or two years,” Semiconductor Manufacturing International Corp co-CEO Zhao Haijun said Wednesday (Feb 11) on a call with analysts. “As for what exactly these data centres will do, that hasn’t been fully thought through.”
AI-related infrastructure investment is projected to exceed US$3 trillion over the next five years, according to Moody’s Ratings, as developers pour eye-watering sums into data centres to house training and inference chips designed by companies including Nvidia Corp, Advanced Micro Devices Inc and Huawei Technologies Co. In 2026 alone, the combined capital expenditure of Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Microsoft Corp is on track to reach US$650 billion, driven by their costly AI arms race.
China’s leading AI developers, including Alibaba Group Holding Ltd, Tencent Holdings Ltd and ByteDance Ltd, are also investing heavily in AI infrastructure equipped with both Nvidia chips and domestically produced alternatives. SMIC operates chipmaking plants from Beijing to Shanghai and Shenzhen but it can only manufacture less advanced AI chips compared with those produced by Nvidia and its contract manufacturer Taiwan Semiconductor Manufacturing Co due to US export restrictions that limit access to cutting-edge equipment.
The surge in spending has also triggered a shortage of high-bandwidth memory, a critical high-end component that enables advanced AI computing. The tight supply of HBM could persist for years, as new capacity takes time to build and qualify, Zhao said.
SMIC’s domestic clients, including Huawei and Cambricon Technologies Corp, are aiming for a rapid ramp-up of their silicon production to meet China’s AI needs.
See also: Alibaba unveils major AI model upgrade ahead of DeepSeek release
“It’s like building high-speed rail stations and highways — even if there aren’t that many cars today, you still want to complete 10 years’ worth of infrastructure in just two years,” Zhao said.
Uploaded by Arion Yeow
