China's AI boom hits chip wall: 5M accelerator demand vs 3.5M supply

China's AI industry is growing fast but faces a severe compute crunch: demand for AI chips is set to exceed 5 million units this year against maximum supply of 3.5 million, with demand projected to top 10 million next year. DeepSeek's repeated outages, including a nearly five-hour API failure, expose the structural infrastructure gap.

• China's AI chip demand to top 5M in 2026 vs supply of up to 3.5M
• Demand could reach 10M chips in 2027
• Combined CAPEX of Alibaba, ByteDance and Tencent doubled to ~700B yuan
• DeepSeek suffered a 4h50m API outage and refunded usage from Oct 8–14