China's AI craze has led to empty data centers and falling GPU rentals

TL;DR: In the wake of ChatGPT's explosive debut in late 2022, China's AI industry experienced a surge of excitement and investment. However, this initial fervor has given way to a sobering reality as the country grapples with an oversupply of underutilized data centers and shifting market dynamics. Xiao Li, a former real estate contractor who pivoted to AI infrastructure in 2023, has witnessed this transformation firsthand through the fluctuating demand for Nvidia GPUs. A year ago, traders in his network boasted about acquiring high-performance Nvidia GPUs despite U.S. export restrictions. Many of these chips were illegally funneled into Shenzhen through international channels. At the market's peak, an Nvidia H100 – crucial for training AI models – could fetch as much as 200,000 yuan ($28,000) on the black market. Today, Li noticed that traders have become more discreet and GPU prices have stabilized. Additionally, two data center projects he is acquainted with are struggling to attr ... Read full article.