Kunlunxin, a Chinese semiconductor design firm backed by Baidu, has secured chip orders worth over 1 billion yuan (US$139 million) for China Mobile’s AI projects.

The company will supply AI chips compatible with Nvidia’s CUDA software to H3C Technologies and ZTE, both key suppliers to China Mobile.

Baidu holds a 59% stake in Kunlunxin, according to Chinese corporate registry Qichacha.

A Huawei-related firm also received part of the orders requiring compatibility with Huawei’s Compute Architecture for Neural Networks (CANN), an equivalent of CUDA, based on tender results from China Mobile.

Earlier this year, Kunlunxin said it had started operating a cluster of 30,000 of its third-generation P800 Kunlun chips for large-scale AI model training.

Chinese domestic GPUs are competing for market share with Nvidia as authorities promote local chip development.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Chinese AI chip makers prioritize Nvidia compatibility over proprietary ecosystems

Kunlunxin’s $139 million win with China Mobile highlights a strategic choice by Chinese semiconductor companies to build CUDA-compatible chips rather than entirely separate platforms1.

This compatibility focus addresses a critical business reality: many developers rely on Nvidia’s CUDA platform to build AI applications, making switching costs a major barrier to adoption of alternative chips1.

The original article notes that Baidu’s Kunlun chips and other domestic GPUs have better CUDA compatibility than Huawei’s Ascend chips, which use a proprietary CANN platform, demonstrating how compatibility directly impacts competitiveness1.

This approach reflects successful technology adoption patterns where companies lower switching barriers rather than forcing users to abandon existing workflows and investments.

The strategy appears particularly important given that China consumes over 50% of the world’s chips, creating enormous domestic demand that Chinese companies can capture if they reduce friction for existing Nvidia users2.

2️⃣ State-owned enterprises drive demand for domestic semiconductor alternatives

China Mobile’s decision to award over $139 million in AI chip orders to Chinese companies like Kunlunxin demonstrates how state-owned enterprises are becoming key customers for domestic alternatives1.