Local governments are now handing out fat subsidies that slash energy costs for data centres by up to half, as long as they use Chinese-made silicon from Huawei, Cambricon and other domestic heroes. Operators sticking with foreign kit, particularly from Nvidia, can whistle.
Provinces awash with data barns such as Gansu, Guizhou and Inner Mongolia have been told to sweeten the deal for tech heavyweights including ByteDance, Alibaba and Tencent. These firms were moaning about ballooning energy bills after Beijing banned the import of Nvidia’s AI chips, leaving them with less efficient homegrown alternatives that burn through power like a faulty kettle.
Insiders said several companies griped to regulators that Chinese chips gobble 30 to 50 per cent more electricity than Nvidia’s H20 gear. Huawei’s engineers have tried to make up the shortfall by wiring together huge clusters of its Ascend 910C chips, which naturally sends power use through the roof.
To keep the servers humming, local authorities are covering electricity bills at a cheap as chips rate. One source told the FT that some subsidies are so generous they can pay a data centre’s running costs for a year.
Unit electricity prices in the big data provinces are already about 30 per cent cheaper than on the coast. With the new handouts, operators will be paying roughly 0.4 yuan, or about 5.6 cents, per kilowatt-hour. That undercuts the 9.1-cent US average, according to the Energy Information Administration, and gives Beijing another propaganda win.
China wants its tech giants to break their dependence on Nvidia and the rest of the US chip racket by throwing money at domestic suppliers. In the process, it hopes to juice its semiconductor sector and prove that its AI ambitions won’t be throttled by Washington’s export bans.
The approach reeks of desperation. Huawei’s chips might be getting better, but they remain far behind the top American gear. Beijing’s answer is to paper over the inefficiency with subsidies and cheap power rather than engineering brilliance.
ByteDance, Alibaba and Tencent have kept their mouths shut, which probably means they’re trousering the cash and saying nothing. The local governments and China’s National Development and Reform Commission also kept mum, though no one expected them to say anything meaningful.
