Tencent Doesn’t Care If It Can Buy American Gpus Again – It Already Has All Thechips It Needs

Chinese web giant Tencent doesn’t mind if Washington doesn’t let it buy more American GPUs, because it already has all the chips it needs.

During the company’s Q2 earnings call a financial analyst asked if the USA’s recent decision to allow Nvidia and AMD to resume GPU sales to China will impact Tencent.

Company president Martin Lau responded: “We do not have a definite answer on the import situation yet. There are a lot of discussions between the two governments.”

“From our own perspective, we do have enough chips for training and continuous upgrade of our existing models,” Lau added. “We also have many options for inference chips.”

Tencent may not need to exercise those options.

“We are executing a lot of software improvements in order to drive efficiency in inference so we can put more workloads on the same number of chips,” Lau said.

Lau’s remarks are unwelcome for four reasons.

One is that AMD and Nvidia hope to see revenue spikes once they are again allowed to sell into China. If a big client like Tencent isn’t shopping, that could dent their ambitions. Another is that the Trump administration plans to take a cut of GPU sales to the Middle Kingdom.

A third is that Tencent has hinted it can meet future needs for inferencing chips with products from sources other than US chipmakers.

The fourth is that the Chinese company’s optimization work suggests it plans to slow purchasing in the long term.

Lau delivered more bad news for investors hoping to cash in on the AI boom, when asked about how AI investments are impacting Tencent’s margins.

“Depreciation cost from AI will continue to go up,” he said. “But we continue to reap the benefits of AI. The issue is these two may not match each other completely, but both are moving in the same general direction.”

Those remarks suggest Tencent is not finding it easy to find customers who pay for its AI services.

Earlier on the call, Lau said the company’s public cloud business has decided to pursue business opportunities that aren’t dependent on “the vagaries of the GPU supply situation.”

“Our cloud strategy is not dependent on GPU,” he said. “We are also growing in CPU and database.”

One more kick for the AI enthusiasts out there: This is the third quarter in a row Tencent told investors it doesn’t need more GPUs.

Tencent remains in fine financial health, with Q2 revenue reaching RMB184.5 billion ($25.7 billion) and delivering 15 percent year-over-year growth. Net profit grew 11 percent RMB 64.8 billion ($9 billion). Average monthly users of its Weixin and WeChat social networks rose to 1.411 billion, annual growth of 40 million/three percent. ®

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