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China Telecom plans huge computing centre in Shanghai's hi-tech zone, helping to build computational power to support AI drive

China Telecom, which is quickly emerging as a powerful player in China's cloud market, has unveiled a plan to set up a huge computing centre in the hi-tech zone of Shanghai to support the city's artificial intelligence (AI) industry.

The state-owned company, through a subsidiary, plans to deploy a total of 40,000 high-power racks - each rack usually contains dozens of servers - for intelligent computing and supercomputing. The company did not disclose the investment size. China had 6.5 million racks in total as of the end of 2022.

It marks one of the biggest investments by China Telecom in computing centres as China accelerates development of its national computational power capabilities. This comes amid increased rivalry in advanced technologies, such as AI, with the US.

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The development of AI technology, especially evident in the recent frenzy around ChatGPT-like services, is fuelling demand for the computing power needed by large language models (LLM).

The computing centre in Shanghai's Lingang New Area will mainly serve local development of graphics processing units (GPUs) as the world's dominant GPU maker, Nvidia, is not allowed to sell its most advanced products to China. The home-grown GPUs, in turn, can help AI businesses in Shanghai and the Yangtze River Delta, the official Shanghai Securities News reported.

China is pulling together resources from the state and corporate sector to seek technology breakthroughs in its whole-country approach, although the jury is still out on whether the approach will work.

Separately, an association called Lingang New Area Intelligent Computing Industry Alliance, which aims to "share computing power resources, technologies and foster cooperation" among members, was created on Friday in Lingang led by China Unicom, another major state-owned telecoms network operator.

As a number of Chinese Big Tech companies, including Baidu, Alibaba Group Holding and many others have jumped on the generative AI bandwagon by launching their own LLMs, concerns are also rising that China is facing mounting pressure in terms of access to computing power. Alibaba owns the Post.

Last August the US banned Nvidia from selling its high-performance A100 and H100 data centre GPUs to China-based customers without a licence, as part of a larger US-led effort to reduce China's access to advanced chips.

Lingang New Area, part of Shanghai's free-trade zone developed at the direction of President Xi Jinping in 2019, can be seen as China's response when it comes to expanding computing capacity, envisioned by Shanghai's authorities as an important gathering place for the national AI industry.

At an industry conference held in Lingang this February, local officials renewed their pledge to attract 20,000 to 30,000 workers to AI and 500 related enterprises to the area by 2025. SenseTime, one of China's leading AI companies, opened up an AI data centre in the area last January, the largest facility of its kind in Asia.

By 2025, a "multi-computing power supply system" will be formed in the area, led by intelligent computing power, with a total industry scale exceeding 10 billion yuan, Wu Xiaohua, deputy Communist Party secretary of Lingang, said at the conference on Friday.

State-owned telecoms network operators have emerged as a key part of the jigsaw in providing computing power for AI development in Shanghai and neighbouring areas, as the city doubles down on efforts to become a national AI hub.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.