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Tech war: China sees glut of AI data centres as GPU mismatches exacerbate weak demand

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Total computing power in China accounted for 26 per cent of the world’s total as of June, trailing only the US, but CPU usage rates are low

China’s rush to build a nationwide network of artificial intelligence (AI) data centres is running the risk of creating an oversupply of computing power, experts and industry professionals said.

Data from CCID Consulting, a government-backed think tank focused on technology, shows that more than 250 internet data centres have either been built or are under construction in China as of June, as local governments, state-owned telecommunications network operators and private investors pour money into the “new infrastructure”.

Many of these artificial intelligence (AI) computing facilities are also located in areas far from the nation’s technology centres.

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Total computing power in China reached a whopping 246 Eflops as of June this year, according to data published in September by the China Academy of Information and Communications Technology (CAICT), an institute affiliated with the Ministry of Industry and Information Technology. Eflops is a unit for measuring the speed of a computer system.

That accounted for 26 per cent of the world’s total, trailing only behind the US, according to CAICT.

However, the central processing unit (CPU) use rate of computing resources provided by privately-held servers is less than 5 per cent, according to a research report on the public cloud issued by China’s State Information Centre (SIC), a group affiliated with the National Development and Reform Commission. Experts warn of an impending glut of computing power as many data centres sit idle due to lack of demand.

“In the past few years, with the buildout of new infrastructure, some government-backed companies did build some data centres which now sit idle,” said Helen Fang, head of industrial research at HSBC. “These centres tend to not be located in or around first-tier cities, or are too small in size to meet mainstream demand.”

China’s provincial governments are rushing to support new data centres to spur the local economy, according to an employee of a mainland AI chip start-up, who declined to be named. There is little consideration given to how the data centre could operate after it is built, the person added.

Shan Zhiguang, a director at the State Information Centre, warned in April that many jurisdictions in the country are rushing to build data centres, based on the suppliers’ sales agenda instead of market demand. “The demand for computing power in China is still limited due to the lack of big models-based killer applications,” Shan said. “If built too early and too much, it may create a glut,” he told Chinese media 21st Century Business Herald.

Amid US sanctions that restrict Chinese enterprises from buying advanced chips from suppliers like Nvidia, many of these government-backed projects were given tacit orders to prioritise the use of domestic CPUs, graphics processing units (GPUs) and memory chips over foreign counterparts. That would only aggravate the situation because domestic-made hardware from various brands is more difficult to configure, especially if connected to form large computing clusters consisting more than 10,000 GPUs, according to experts.

Visitors learn about cloud computing at Alibaba’s APSARA Conference 2024, Sept. 19, 2024. Photo: Xinhua

 

In one example, China Mobile’s newest data centre is in Harbin, capital of northeast Heilongjiang province, and runs on 18,000 domestic-made GPUs. Separately, Jixi, a traditional coal-mining city in the province, inked a deal in May with a Hainan construction company to invest 14 billion yuan (US$1.98 billion) to build a data centre using only Chinese suppliers, including Tencent Cloud, AI chip start-up EnFlame, and Chinese chip giant Sugon.

Government-built data centres are often required to use domestic hardware and software together, according to a former manager of SenseTime who works on generative AI-related projects. Domestic GPUs are only compatible with certain models, this person said. So if a company wants to train or use foreign models it has to use Nvidia cards, not government-owned computing resources, the person added.

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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

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Google wants nuclear reactors to power its AI data centers

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Google is the latest tech company to seek nuclear energy to cope with the high demand of electricity propelled by its development of AI.

US technology giant Google said on Monday that it plans to purchase nuclear power in order to operate data centers.

Google announced an agreement with California-based Kairos Power to bring small modular reactors (SMR) online by 2030, with additional reactor deployments through 2035, the company said.

No financial details of the deal have been made available and it is still unclear whether Google wants to co-finance the construction of the power plants or just purchase electricity after completion.

With the announcement, Google becomes the latest tech company to turn to nuclear energy to cope with the high demand of electricity propelled by its development of artificial intelligence (AI).

“We believe that nuclear energy has a critical role to play in supporting our clean growth and helping to deliver on the progress of AI,” Google senior director of energy and climate said during a briefing.

“The grid needs these kinds of clean, reliable sources of energy that can support the build out of these technologies.”

Kairos says SMRs are safer

Other companies like Microsoft have already bet on nuclear energy. Three Mile Island, the site of America’s worst nuclear accident, is expected to restart operations to provide energy to Microsoft.

Kairos Power said that the SMRs that it will provide for Google are cooled with molten fluoride salts instead of water. The company said that this design is deemed safer than conventional reactors because the coolant does not boil.

Although SMRs are seen as a pioneering new technology, backed by big investors such as Microsoft founder Bill Gates, the technology is still nascent and lacks regulatory approval.

Data centers raise Google’s emissions

US tech companies have recently made commitments to climate-neutral operations.

In recent years, they have increasingly relied on renewable energy, but AI has challenged that model with its increasingly high demand for electricity.

“Overall, this deal will enable up to 500 MW of new 24/7 carbon-free power to US electricity grids and help more communities benefit from clean and affordable nuclear power,” Google manager Michael Terrell said in a blog post.

In 2023, 64% of the energy used by Google’s data centers and offices was CO2-free, but the company’s CO2 emissions still rose by 13% within a year.

Data centers’ energy consumption played a major role in Google’s rising emissions.

jcg/zc (AFP, dpa, Reuters)

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Vietnam launches commercial 5G services

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Viettel has launched Vietnam’s first commercial 5G network, offering early access with faster speeds and enhanced connectivity in select areas as the country moves into the 5G era.

The official enrollment of Vietnam’s first commercial 5G network is expected from Viettel on Oct. 15, marking the 20th anniversary of the military-run telecom service provider.

However, users can already sign up for the service and experience high-speed connectivity in covered areas ahead of the official launch.

One such early adopter is Tran Duc, who lives in Ho Chi Minh City. Duc mentioned that he first noticed 5G advertisements at the end of last month but was initially skeptical, given the repeated delays in 5G commercialization.

Upon visiting a telecom store earlier this week, staff confirmed that “registration is now available,” with prepaid packages starting from VND135,000 (US$5.43).

“After registering, whenever I enter a 5G-covered area, my phone automatically switches to the network,” Duc shared. Unlike previous free trial periods, his app now tracks data usage as it depletes.

Since early this month, prepaid subscribers have been able to sign up for 5G via various Viettel sales websites. By Thursday, postpaid packages were also introduced.

Over the weekend, users across several places, including Ho Chi Minh City, Hanoi, and provinces near the capital like Thai Binh and Nam Dinh, reported seeing unexpected 5G signals, though the connection later disappeared. After subscribing to the service, the signal reappeared.

Viettel Telecom has not yet commented on the rollout. Earlier, the company launched the “Nine” package, which ranges from VND200,000 to VND2 million and offers “priority early 5G access” to subscribers.

As the service is still under development and not officially launched, some users have experienced registration difficulties.

Minh Thanh, another HCMC resident, noted that he has not been able to switch to 5G due to using a SIM card with an annual 4G plan. The telecom app does not display the 5G service, requiring users to register through SMS, USSD codes, or by contacting customer service.

Users should also ensure their area has 5G coverage before switching.

Globally, 5G technology has been commercially deployed for five years, ushering in an era of hyperconnectivity and enabling the Internet of Things (IoT).

In China, 5G is used across industries such as manufacturing, mining, power grids, ports, and healthcare, while many countries are still in the testing phase.

For regular users, 5G offers significantly faster speeds, with ideal maximums reaching 10 Gbps. In practical use, speeds of 1 Gbps—10 times faster than the 100 Mbps of 4G—are common, improving online work, study, and entertainment experiences.

Other key advantages of 5G include ultra-low latency and the ability to support many devices simultaneously, enabling technologies like autonomous vehicles, remote surgical device control, and virtual and augmented reality experiences. However, 5G stations cover smaller areas due to higher frequencies, requiring more stations compared to 4G.

To use 5G, in addition to subscribing to the service, users need a compatible device. High-end smartphones such as the iPhone 12, Galaxy S20 Ultra, Galaxy Z Fold2, and newer models already support 5G. Many mid-range and budget Android phones released in the last 2-3 years are also equipped with this connectivity.

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When the grid collapses, The System Operator (S.O) detects the problem and either fixes or isolates it.

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The S.O. immediately begins the restoration of the grid (called black start), usually within the hour of the collapse.

All GenCos (Zungeru, Egbim, Alaoji, Afam, Omotosho, Papalanto, Shiroro, Jebba, Kainji etc) will gradually initiate generation and synchronisation.

Both National & Regional Control Centers in Osogbo/Shiroro/Lagos monitors load generation+transmission (synchronization) and with more emphasis on distribution Discos maintaining specific load allocation in other not to collapse the system yet, again.

The Eleven Discos through their Dispatch Offices initiates standby for power supply to be restored to sensitive Areas. Example: In Abuja, AEDC Dispatch Offices initiates immediate restoration to Aso Rock State House, NIA, DSS, MILITARY FORMATIONS, RADIO AND TV HQs, FORCE HQ, Sensitive Government offices and residences, etc

Bulk load to consumers will be strategically despatch to priority location while ensuring stability.

If everything goes well, 50% generation or higher may likely be restored before 6 am tomorrow morning.

Abuja & Lagos likely to get light this night, with not 100% coverage and assurance.

 

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