AI ASICs: China May Have Plans for AI Software and AI Hardware
December 1, 2025
Another dinobaby original. If there is what passes for art, you bet your bippy, that I used smart software. I am a grandpa but not a Grandma Moses.
I try to avoid wild and crazy generalizations, but I want to step back from the US-centric AI craziness and ask a question, “Why is the solution to anticipated AI growth more data centers?” Data centers seem like a trivial part of the broader AI challenge to some of the venture firms, BAIT (big AI technology) companies, and some online pundits. Building a data center is a cheap building filled with racks of computers, some specialized gizmos, a connection to the local power company, and a handful of network engineers. Bingo. You are good to go.
But what happens if the compute is provided by Application-Specific Integrated Circuits or ASICs? When ASICs became available for crypto currency mining, the individual or small-scale miner was no longer attractive. What happened is that large, industrialized crypto mining farms pushed out the individual miners or mom-and-pop data centers.
The Ghana ASIC roll out appears to have overwhelmed the person taking orders. Demand for cheap AI compute is strong. Is that person in the blue suit from Nvidia? Thanks, MidJourney. Good enough, the mark of excellence today.
Amazon, Google, and probably other BAIT outfits want to design their own AI chips. The problem is similar to moving silos of corn to a processing plant with a couple of pick up trucks. Capacity at chip fabrication facilities is constrained. Big chip ideas today may not be possible on the time scale set by the team designing NFL arena size data centers in Rhode Island- or Mississippi-type locations.
A Chinese startup founded by a former Google engineer claims to have created a new ultra-efficient and relatively low cost AI chip using older manufacturing techniques. Meanwhile, Google itself is now reportedly considering whether to make its own specialized AI chips available to buy. Together, these chips could represent the start of a new processing paradigm which could do for the AI industry what ASICs did for bitcoin mining.
What those ASICs did for crypto mining was shift calculations from individuals to large, centralized data centers. Yep, centralization is definitely better. Big is a positive as well.
The write up adds:
The Chinese startup is Zhonghao Xinying. Its Ghana chip is claimed to offer 1.5 times the performance of Nvidia’s A100 AI GPU while reducing power consumption by 75%. And it does that courtesy of a domestic Chinese chip manufacturing process that the company says is "an order of magnitude lower than that of leading overseas GPU chips." By "an order or magnitude lower," the assumption is that means well behind in technological terms given China’s home-grown chip manufacturing is probably a couple of generations behind the best that TSMC in Taiwan can offer and behind even what the likes of Intel and Samsung can offer, too.
The idea is that if these chips become widely available, they won’t be very good. Probably like the first Chinese BYD electric vehicles. But after some iterative engineering, the Chinese chips are likely to improve. If these improvements coincide with the turn on of the massive data centers the BAIT outfits are building, there might be rethinking required by the Silicon Valley wizards.
Several observations will be offered but these are probably not warranted by anyone other than myself:
- China might subsidize its home grown chips. The Googler is not the only person in the Middle Kingdom trying to find a way around the US approach to smart software. Cheap wins or is disruptive until neutralized in some way.
- New data centers based on the Chinese chips might find customers interested in stepping away from dependence on a technology that most AI companies are using for “me too”, imitative AI services. Competition is good, says Silicon Valley, until it impinges on our business. At that point, touch-to-predict actions come into play.
- Nvidia and other AI-centric companies might find themselves trapped in AI strategies that are comparable to a large US aircraft carrier. These ships are impressive, but it takes time to slow them down, turn them, and steam in a new direction. If Chinese AI ASICs hit the market and improve rapidly, the captains of the US-flagged Transformer vessels will have their hands full and financial officers clamoring for the leaderships’ attention.
Net net: Ponder this question: What is Ghana gonna do?
Stephen E Arnold, December 1, 2025
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