Tencent and Baidu Reveal Strategies to Counter U.S. Chip Curbs and Sustain AI Development

Chinese tech giants Tencent and Baidu have disclosed how they are staying competitive in the global artificial intelligence race, even as Washington tightens export restrictions on advanced semiconductors from U.S. firms like Nvidia and AMD.

During recent earnings calls, executives from both firms outlined strategies such as stockpiling high-end chips, software optimization, and increasing reliance on homegrown semiconductors to power their AI operations.

Tencent President Martin Lau said the company has a “strong stockpile” of GPUs and is optimizing its AI model efficiency, using smaller and more efficient models that reduce dependency on additional hardware. “We believe we have enough high-end chips to train models for a few more generations,” he noted.

Lau added that Tencent is exploring alternatives such as custom chips and domestic solutions, while using software-based efficiencies for AI inferencing tasks to extend the utility of existing GPU resources.

Baidu, meanwhile, emphasized its “full-stack AI” capabilities—combining cloud infrastructure, proprietary AI models, and user-facing applications like the ERNIE chatbot. Dou Shen, head of Baidu’s AI cloud unit, said the company’s internal control over its tech stack has enabled it to lower AI operating costs and improve GPU utilization.

Shen also highlighted progress in China’s domestic chip development, saying homegrown semiconductors, paired with an increasingly self-reliant software ecosystem, would be key to long-term AI innovation in China.

Experts like Gaurav Gupta of Gartner acknowledge that while Chinese GPUs still trail U.S. counterparts, China’s semiconductor ecosystem—from chip design to packaging—has made “decent success” in recent years.

U.S. restrictions, though intended to curb China’s AI rise, may be having unintended consequences. Nvidia CEO Jensen Huang recently labeled the curbs a “failure,” arguing they harm U.S. business competitiveness more than they limit China’s capabilities.

As chip access narrows, China’s top tech firms appear determined to adapt, innovate, and forge ahead with domestic solutions.