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Breaking Down Nvidia's AI Chip Deal with Chinese Tech Giants

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At Nvidia’s (NVDA - Free Report) GTC China conference in Beijing on Monday, the chip maker announced that the company has made a deal to supply its artificial intelligence hardware to some of the biggest names in Chinese technology.

Alibaba (BABA - Free Report) , Baidu (BIDU - Free Report) , and Tencent (TCEHY - Free Report) will each be upgrading their massive data centers to Nvidia’s Volta-based platform, which offers greater speed and scalability for AI training and inferencing; the companies were utilizing Nvidia’s Pascal architecture-based system before.

Volta-based chips, which have 21 billion transistors, offer five times the performance compared to Pascal-based chips.

Nvidia’s deal with Alibaba and the like reflect similar partnerships it has struck with U.S. cloud providers like Amazon (AMZN - Free Report) , Alphabet (GOOGL - Free Report) , Microsoft (MSFT - Free Report) , and Facebook (FB - Free Report) , among others.

Additionally, China’s leading original equipment manufacturers like Huawei, Inspur, and Lenovo (LNVGY - Free Report) will now use Nvidia’s HGX reference architecture to offer Volta-based systems for hyperscale data centers.

“AI is the most important technology development of our time, with the greatest potential to help society,” said Chief Executive Jensen Huang in a statement. “As the world’s leading cloud providers deploy the world’s best AI platform, with Volta GPUs and Nvidia software, we’ll see amazing breakthroughs in medicine, autonomous transportation, precision manufacturing and much more.”

Nvidia also announced a new version of its TensorRT software, a tool that dramatically accelerates AI inferencing, which is a process where a neural network learns how to recognize objects and patterns. TensorRT 3 will allow this normally time-consuming process to be done as much as 40 times faster, thereby cutting costs on inferencing on Nvidia-based AI hardware.

Nvidia said that over 1,200 companies user TensorRT across a wide range of industries

“Nvidia TensorRT is the world’s first programmable inference accelerator. With CUDA programmability, TensorRT will be able to accelerate the growing diversity and complexity of deep neural networks. And with TensorRT’s dramatic speed-up, service providers can affordably deploy these compute intensive AI workloads," said Huang.

Along with Chinese tech leaders, Nvidia will be working with (JD - Free Report) on its drone and robot fleets. Powered by Nvidia’s Jetson supercomputer, the new drone will be tested in many delivery pilot programs—similar to one of Amazon’s Prime delivery initiatives.

According to a statement, JD will release over one million drones throughout the next five years, and the program aims to help deliver product with drones in rural areas, and use on-the-ground robots to deliver in urban areas.

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