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- Chinese tech giants including Alibaba have reportedly ordered $5 billion of Nvidia's microchips.
- They may be afraid of losing access after the White House restricted US investment in Chinese tech.
- The latest ban aims to limit the Chinese military's access to American technology and dollars.
Chinese internet companies have rushed to order $5 billion of microchips from Nvidia, amid growing worries the US will restrict their access to US exports, the Financial Times reported on Wednesday.
News of the scramble broke on the same day the Biden administration ordered a ban on US investment in sensitive Chinese technologies such as artificial intelligence, semiconductors, and quantum computing. Its aim is to reduce the Chinese military's access to American technology and dollars.
Alibaba, Tencent, Baidu, and TikTok-owner Bytedance have ordered $1 billion worth of processors to be delivered this year, and another $4 billion worth to be delivered in 2024, the FT said, citing multiple people familiar with the matter.
The White House justified its latest ban on national-security grounds, as China could use American tech to develop cutting-edge weapons, codebreaking tools, and other potential threats to the US.
"This is blatant economic coercion and technological bullying," the Chinese foreign ministry responded in a statement translated by CNBC.
Nvidia's stock has roughly tripled in price this year, as investors wager its sought-after chips will play a key role in powering the AI revolution. The graphics-chip specialist is the S&P 500's best performer this year, and its market capitalization has swelled to over $1 trillion.
Biden's ban threatens to deal a fresh blow to China's ailing economy, which has been hit by faltering growth, soaring youth unemployment, and onerous amounts of debt. The nation also reported deflation this week for the first time in over two years, as Chinese consumers slowed their spending.