Alibaba in Talks to Buy Up to 50,000 AMD MI308 AI Accelerators as China Seeks NVIDIA Alternatives

In a move that could significantly reshape the competitive landscape of China’s AI hardware market, Alibaba Group is reportedly in advanced negotiations to purchase between 40,000 and 50,000 AMD MI308 AI accelerators. According to sources familiar with the discussions, the potential deal marks a pivotal moment for both AMD’s ambitions in China and the country’s ongoing efforts to diversify its AI computing infrastructure amid tightening U.S. export controls.

The MI308 is AMD’s China-tailored AI chip, designed specifically to comply with U.S. export regulations while delivering competitive performance for local AI workloads. The chip has already secured approval from U.S. authorities, though AMD is required to pay a 15% licensing fee to the U.S. government for each unit sold—a cost that still allows the MI308 to undercut rival offerings in the Chinese market.

Built with 192GB of high-bandwidth memory (HBM3), the MI308 is engineered to handle demanding AI inference tasks. Notably, it can run long-context inference for 70-billion-parameter large language models on a single card, a capability that positions it as a strong contender for enterprise-scale AI deployments. With a price point of approximately $12,000 per unit, the MI308 is priced about 15% lower than NVIDIA’s H20, another AI accelerator tailored for the Chinese market. Unlike NVIDIA’s offering, the MI308 has not been subject to the same level of security scrutiny, potentially making it a more attractive option for Chinese firms navigating geopolitical sensitivities.

If finalized, the deal would represent a major breakthrough for AMD in China, a market where NVIDIA has long dominated the AI accelerator segment. For Chinese AI developers, the availability of the MI308 would provide a much-needed alternative to NVIDIA’s hardware, reducing dependency on a single supplier and mitigating risks associated with supply chain disruptions or policy shifts.

The timing of the potential agreement is particularly significant. Over the past two years, U.S. export restrictions on advanced AI chips have intensified, prompting Chinese tech giants to seek domestic and alternative international solutions. Companies like Baidu, ByteDance, and Tencent have already begun stockpiling NVIDIA GPUs, while others are investing heavily in homegrown AI chip development. Alibaba’s potential large-scale adoption of the MI308 signals a strategic pivot toward a more diversified hardware ecosystem.

Industry analysts suggest that the deal could also accelerate AMD’s broader push into the Chinese AI market. The company has been steadily expanding its presence, forming partnerships with local cloud providers and server manufacturers. A high-profile win with Alibaba—one of China’s largest cloud computing and AI players—could open the door to further collaborations and deployments across the region.

However, challenges remain. The 15% licensing fee imposed by the U.S. government adds a layer of complexity and cost to the MI308’s value proposition. Additionally, AMD will need to prove that its software ecosystem and developer support can match NVIDIA’s well-established CUDA platform, which remains the industry standard for AI development.

Despite these hurdles, the potential Alibaba deal underscores a broader trend: the AI hardware market in China is becoming increasingly competitive, with multiple players vying for market share. As Chinese firms seek to build resilient and sovereign AI infrastructure, the demand for diverse, compliant, and high-performance computing solutions is only set to grow.

For now, all eyes are on AMD and Alibaba as negotiations continue. If the deal goes through, it could mark the beginning of a new chapter in China’s AI hardware evolution—one where competition, rather than monopoly, drives innovation and choice.

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