Alibaba, a leading Chinese technology firm, announced on Tuesday that it has made significant upgrades to its artificial-intelligence model. Despite the efforts by the United States to restrict their access to advanced chips, Chinese tech companies, including Alibaba, continue to forge ahead with AI advancements.

Tongyi Qianwen AI Model Gets a Major Upgrade

Alibaba Group Holding (ticker: BABA) revealed that the latest version of its Tongyi Qianwen AI model boasts several hundred billion parameters, showcasing its enhanced complexity. This update marks a significant improvement over the previous version, which was launched back in April.

Chinese Tech Companies Racing for AI Dominance

Just like their American counterparts, Chinese tech companies are engaged in a fierce competition to establish dominance in the field of artificial intelligence. Baidu, a prominent search-engine company, has recently asserted that its latest AI model is on par with the one developed by ChatGPT-maker OpenAI.

US Restrictions and the Battle for AI Supremacy

The United States aims to curb the development of AI systems by Chinese companies by imposing limitations on the export of advanced chips, including those manufactured by Nvidia (NVDA). The recent tightening of these restrictions has left roughly $5 billion in orders for Nvidia's chips from Chinese firms, including Alibaba, ByteDance (the owner of TikTok), and Baidu, in a state of uncertainty, as reported by The Wall Street Journal.

Alibaba has not provided an immediate response to requests for comments regarding this matter.

Analysts at CreditSights revealed in a recent research note that advanced AI chips have not gained widespread usage in the core operations of Chinese internet giants like Alibaba and JD.com. However, they warn that the medium to long-term development of these companies could be adversely affected by restrictions imposed by the United States.

According to the CreditSights analysts, Chinese internet giants may have stockpiled Nvidia A800/H800 GPUs for generative AI research and development. The exact scale of these existing stocks and their longevity, however, remains uncertain.

Alibaba's cloud unit currently offers clients access to a diverse range of AI models, including their own proprietary ones. In a recent announcement, Alibaba stated its intention to provide access to a model developed by Meta Platforms (formerly Facebook) - aiming to be the most open cloud platform in the era of AI. The company emphasized its commitment to enabling easier and more affordable AI development and utilization for all. Joe Tsai, chairman of Alibaba, expressed these sentiments during a speech at a company event.

Despite this, premarket trading on Tuesday saw a 1.5% decline in American depositary receipts of Alibaba, while Baidu's ADRs experienced a 1.3% drop.

Overall, while advanced AI chips are not extensively integrated into the core operations of major Chinese internet companies, their potential development could face challenges in the future due to potential U.S. restrictions.

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