In China, up to 80% of newly constructed AI data centers remain unused. Over 500 new data center projects were announced in 2023 and 2024, with at least 150 completed by the end of 2024. The frenzy led to Nvidia H100 chips selling for up to 200,000 yuan ($28,000) on the black market. However, the GPU rental market has cooled, with an Nvidia H100 server now renting for 75,000 yuan per month, down from 180,000 yuan. In 2024, 144 companies registered to develop large language models, but only 10% continued investing in large-scale model training by year’s end. The rise of DeepSeek’s R1 model has shifted focus from model creation to utilization. Despite the underutilization, major Chinese tech firms like Alibaba and ByteDance plan to invest $50 billion and $20 billion respectively in AI infrastructure. Demand for Nvidia’s H20 chip, optimized for AI inference, remains strong.
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