Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Earlier this year, our colleague James Mager took a trip
Speaker 2: to the middle of the desert in the remote region
Speaker 2: of Shinjong, China.
Speaker 3: Shinjung is the western third of China. Basically it borders Mongolia, Kazakhstan,
Speaker 3: Uzebekistan and where we went on this trip is situated
Speaker 3: in a river valley. It's got these lovely snow capped
Speaker 3: mountains overlooking the town. Really was a stunningly beautiful place,
Speaker 3: but very hard to get to.
Speaker 2: James was there on a lead generated by Bloomberg's data
Speaker 2: journalism team that a handful of Chinese companies were building
Speaker 2: some forty data centers across the region and planned to
Speaker 2: power them with tens of thousands of Nvidia chips. Chips
Speaker 2: that the US banned from being exported to China in
Speaker 2: twenty twenty two is as well. China has criticized the
Speaker 2: US moves to expand restrictions one is access to sympiconductor technology,
Speaker 2: saying that they will harm supply chains and the world economy.
Speaker 1: They want to build a AI industry that can go
Speaker 1: head to head with the US.
Speaker 2: Bloomberg data reporter Andy Linn led the team's investigation.
Speaker 1: In modern warfares, AI is playing a larger role, so
Speaker 1: the US is worried about China developing the AI capacity
Speaker 1: with developing their high end military must be.
Speaker 2: In Since the Biding Administration's initial restrictions on advanced AI chips,
Speaker 2: the US has tightened export controls, putting them at the
Speaker 2: center of tensions with Beijing. Just last week, Bloomberg learned
Speaker 2: of plans by the Trump administration to further restrict the
Speaker 2: shipments of AI chips to Thailand and Malaysia, part of
Speaker 2: an effort to prevent them from being potentially smuggled into China.
Speaker 1: So by building these data centers and build up the
Speaker 1: computing power, they aim to build a local, domestic EI
Speaker 1: industry that can go ahead to have with opening AI
Speaker 1: Alphabet Amazon Meta in the US.
Speaker 2: This is the Big Take Asia from Bloomberg News. I'm Wanha.
Speaker 2: Every week we take you inside some of the world's
Speaker 2: biggest and most powerful economies and the markets, tycoons, and
Speaker 2: businesses that drive this ever shifting region. Today on the show,
Speaker 2: China's AI ambition rises from the desert. China is fast
Speaker 2: becoming a world leader in artificial intelligence it's one of
Speaker 2: the top consumers of semiconductors, and as Deepseek's latest model shows,
Speaker 2: Chinese companies are hungry to create top tier AI technology
Speaker 2: to rival international competitors. But Andy says the US government's
Speaker 2: export controls have created a real problem for China by
Speaker 2: limiting its access to Nvidia's priced semiconductors.
Speaker 1: Nvidia is the industrial standard for any AI training operations,
Speaker 1: so for example, Open Ai, the most famous AI companies
Speaker 1: in the world, use Nvidia chips for training the chat,
Speaker 1: GPT models and whatever. You want to build a sophisticated
Speaker 1: AI model, you need to use a lot of Nvidia chips.
Speaker 1: So MVA chip is sought after across all the world
Speaker 1: for all the AI development because every country wants their
Speaker 1: own AI.
Speaker 2: Industry, and he says China's ultimate goal is to have
Speaker 2: its own source of advanced AI chips, ones that are
Speaker 2: on par with Nvidia's offerings. For now, though, in semiconductors
Speaker 2: are the best product on the market and Chinese companies
Speaker 2: are eager to access them.
Speaker 1: Since the US introduced these export controls, I heard sources
Speaker 1: in China saying they are having a hard time getting
Speaker 1: large volumes of Nvidia chips for their operations. I think
Speaker 1: this slow China's access to these chips, but not stop
Speaker 1: them from getting them outright.
Speaker 2: The US government has no official consensus on how many
Speaker 2: restricted Nvidia chips are currently in China. Two senior Biding
Speaker 2: officials estimated that China had around twenty five thousand chips,
Speaker 2: but most of the people Bloomberg spoke to say there
Speaker 2: isn't an agreed upon estimate. That's why when Andy found
Speaker 2: documents laying out the volume of Nvidia chips that companies
Speaker 2: hope to obtain for these data centers, he was.
Speaker 1: Surprised because most of the people I talked to would
Speaker 1: say that they assume some developments of these data standard
Speaker 1: using Nvidia chips is ongoing, but not like declaring to
Speaker 1: the world that they're going to use band Nvidia chips
Speaker 1: in this large volume.
Speaker 2: In the fourth quarter of last year, the Chinese government
Speaker 2: approved a total of thirty nine data center investment projects
Speaker 2: in Shinjan and the neighboring Chinghai province. They've built out
Speaker 2: plans to use more than one hundred and fifteen thousand
Speaker 2: Nvidia processors.
Speaker 1: If wanted to compare this scale to what the US
Speaker 1: have usually the tech companies there will claim if you
Speaker 1: have more than one undred thousand Nvidia chips in one place,
Speaker 1: then you'ing in a place to develop a state of
Speaker 1: the art models which can possibly compete with Gemini Chat JBT.
Speaker 2: These kind of models, there's no explanation in the official
Speaker 2: documents of how companies plan to acquire the band in
Speaker 2: Nvidia chips, and it could all be aspirational. In a
Speaker 2: response from Nvidia, the company said that posting a web
Speaker 2: page about restricted products is not the same as successfully licensing,
Speaker 2: building and operating a data center, and that Nvidia does
Speaker 2: not provide any support or repairs for restricted products. In
Speaker 2: the meantime, the companies listed in the filings, state officials
Speaker 2: and central government representatives in Beijing all declined to comment
Speaker 2: when asked to explain. Still the building continues in the desert.
Speaker 2: Most of these data centers are located in a single
Speaker 2: compound in Ewu County, set up by the local government
Speaker 2: in Shinjug. These data centers house big computers, servers, and
Speaker 2: other components and are used to process, store, and distribute data.
Speaker 2: And while they might be located far from big cities
Speaker 2: like Shanghai or Shenzen, startups in these cities can send
Speaker 2: their models to the data centers for training and optimization.
Speaker 1: Theoretically, any company in China can access that computing power. Essentially,
Speaker 1: you can send a request to the data centers in
Speaker 1: Shinjioan saying that, hey, we want to use how many
Speaker 1: chips to train our models in the eastern regions, and
Speaker 1: then the data centers and Shinjong will produce a result
Speaker 1: to you, maybe in a few minutes or even a
Speaker 1: few seconds. Yeah, so these are all connected because you
Speaker 1: don't need to be present at the data center use
Speaker 1: the computing power.
Speaker 2: Shinjong is an ideal location for large scale data centers.
Speaker 2: Land is cheap and rental costs are low. The region
Speaker 2: also has cool weather, which helps offset the heat generated
Speaker 2: by the servers. Most importantly, it's a hub for green energy.
Speaker 2: On the way to look for the data centers, James
Speaker 2: Mager stumbled across miles and miles of renewable energy installations.
Speaker 3: The desert was just a dusty, rocky plane, and scattered
Speaker 3: across the desert was just windmill after windmill, after solar
Speaker 3: panel installation after solar panel installation, and then there was
Speaker 3: also this power generation, which is where the company uses
Speaker 3: mirrors to concentrate sunlight on tooward tower, which is filled
Speaker 3: with molten sodium, and then that heat is generated by
Speaker 3: concentrating all that sunlight is then used to generate electricity.
Speaker 3: And you can see this like twenty thirty kilometers away
Speaker 3: because the sunlight is so blinding as it's concentrated onto
Speaker 3: this tower.
Speaker 2: This combination of green energy and advanced computing fits in
Speaker 2: with Beijing's economic push for sustainable development. After the break,
Speaker 2: what is China's master plan to build these data centers?
Speaker 2: We zoom in on one company to find out. Bloomberg's
Speaker 2: James Mager spent three days in Shinjung tracking down the
Speaker 2: data centers. Andy Linn and his team had found on paper, Iwu.
Speaker 3: Is pretty remote, even in Shinjong, which is pretty remote
Speaker 3: in China. To get there, it was a four hour
Speaker 3: plane ride from Beijing to the city of Hami, and
Speaker 3: then from Hami to Iwu is another three and a
Speaker 3: half for our car ride up into the mountains.
Speaker 2: Using the data team's coordinates, James was able to locate
Speaker 2: massive building complexes in the desert right where Andy said
Speaker 2: the data centers were being built.
Speaker 3: There was a lot of construction in Eyu, and there
Speaker 3: was some construction going on up in the area with
Speaker 3: all the solar panels. I've never seen a data center before.
Speaker 3: I mean, this is the first time I've seen a
Speaker 3: data center. But they look like what I imagine a data center.
Speaker 1: Would look like.
Speaker 3: You have a large building which is three, four or
Speaker 3: five stories tall, has almost no windows. They obviously don't
Speaker 3: need a lot of light. Having a lot of windows
Speaker 3: is going to make it harder to keep the temperature
Speaker 3: inside the data center controlled at the proper level.
Speaker 2: It sounds like they had certainly all the hallmarks of
Speaker 2: being a data center.
Speaker 1: Yes.
Speaker 2: Among all the projects examined in the investigation, one caught
Speaker 2: the team's attention. It involves a company controlled by Nyocore,
Speaker 2: an energy firm that's partially owned by the state government
Speaker 2: based in Tianjin in northern China. Niacore's main business is
Speaker 2: supplying solar and wind power. And I asked Andy, why
Speaker 2: a green energy firm, of all companies, would be building
Speaker 2: data centers.
Speaker 1: Yeah. So you don't usually think that green energy companies
Speaker 1: delve into the data standard business, but in China, Beijing
Speaker 1: has been encouraging green energy companies to invest into AI
Speaker 1: data centers because they want to lower the carbon foot prints.
Speaker 1: That will create a win win.
Speaker 2: According to the documents, Bloomberg found Nyacore plans to build
Speaker 2: a data center with six hundred and twenty five servers.
Speaker 1: It is one of the largest projects we found in
Speaker 1: the batch of the documents. Based on their investment approvals,
Speaker 1: they need two thousand, one hundred GPU chips. This a
Speaker 1: lot because if you imagine one at one hundred chips
Speaker 1: cost around twenty thousand dollars, then well is a very
Speaker 1: big amount of money just for mid sized green energy
Speaker 1: company in China.
Speaker 2: Niacord is selling its computer power to infinitgens Ai, one
Speaker 2: of the largest AI infrastructure companies in China. The company
Speaker 2: has raised one billion yun or almost one hundred and
Speaker 2: forty million dollars in funding since it was founded in
Speaker 2: twenty twenty three. Niacord declined to comment and infinogens Ai
Speaker 2: couldn't be reached for a response, but last year, the
Speaker 2: CEO of infinogens Ai said in an interview with local
Speaker 2: media that the goal is to make computing power more
Speaker 2: accessible to AI companies all across China.
Speaker 1: Their CEO said they aim to create a computing power
Speaker 1: system that allows AI developers across the main line to
Speaker 1: just log into their system and get all the computing
Speaker 1: power they want, just like opening a like water tap
Speaker 1: and then you can get the water you want.
Speaker 2: Computer power on tap. But in order to make computer
Speaker 2: power accessible anywhere, anytime, there's an issue that needs to
Speaker 2: be addressed first. Shinjong is China's most western region. Most
Speaker 2: of the AI companies that need the computing power are
Speaker 2: based in big cities like Shanghai, far in the east.
Speaker 2: That's more than two thousand miles apart, about the distance
Speaker 2: from Chicago to Los Angeles. Andy says. The Chinese government
Speaker 2: plans to bridge this supplied demand gap by building what
Speaker 2: they call computing power corridors.
Speaker 1: You can think about this as the water resource management
Speaker 1: system in China. They have been moving the water from
Speaker 1: the southern region to the north region, which is suffering
Speaker 1: from draft. So they have been moving crucial resources around
Speaker 1: in the mainland, and now they want to move the
Speaker 1: computing power.
Speaker 2: So in some ways they're thinking of a computing power
Speaker 2: like a utility, right, and the computing power corridor would
Speaker 2: be like the power grid.
Speaker 1: Yeah, yeah, that's what they are aiming for. They're building
Speaker 1: infrastructure like more cables along the codors, so that they
Speaker 1: can encourage more AI developers to build infrastructure in the
Speaker 1: western regions.
Speaker 2: This is all part of China's plan to dominate in AI.
Speaker 2: But in order for China to get there, it needs
Speaker 2: all these things to come together. Its own high tech
Speaker 2: chips that can rival in NVIDIAs, computer power on tap,
Speaker 2: and an industry with cutting edge innovations. And Andy says
Speaker 2: building such a national network could encourage more Chinese companies
Speaker 2: to jump into the AI space without needing to build
Speaker 2: their own data centers. That would help startups come up
Speaker 2: with more innovations like Deepseek did with its chatbot, and
Speaker 2: ultimately narrow the gap between the US and China.
Speaker 1: I think one of the most powerful aspect of this
Speaker 1: utility for AI computing powers that it will not be
Speaker 1: controlled by a couple of tech giants only. So if
Speaker 1: you make a comparison between US and China. In the US,
Speaker 1: computing power is mostly owned by a handful of tech giants.
Speaker 1: Open ai madea alphabet, but if you make it as
Speaker 1: a utility, every developer across the mainline can just log
Speaker 1: into a system and then got as much computing power
Speaker 1: as they want. Then it will create a very distributed
Speaker 1: system for AI innovations, so that anyone who have the
Speaker 1: idea can just create its own model, and then we'll
Speaker 1: have a more collaborative environment for these developments, which is
Speaker 1: totally different from what we have in the US.
Speaker 2: There's a lot of uncertainty about this model. Will China
Speaker 2: be able to create a cheap and reliable power source
Speaker 2: that everyone can tap into, will it be able to
Speaker 2: acquire computer chips that AI development demands, and will China
Speaker 2: be able to make those chips itself rather than relying
Speaker 2: on a US company Like in video.
Speaker 1: What we found in Shinjiai and Shanghai for these scale
Speaker 1: of data CENTTA development shows that Beijing is trying very
Speaker 1: hard to nurture is on domestic AI industry so that
Speaker 1: they can match the tech giants from the wests.
Speaker 2: This is The Big Take Asia from Bloomberg News. I'm wanha.
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