Alibaba Group Holding Ltd. hasn’t been able to completely fulfill demand for AI training from clients because of global supply constraints, its top executive said, suggesting a shortage of critical components such as artificial intelligence chips is weighing on Chinese efforts to ramp up in the cutting-edge technology.

“In the past quarter, we have received strong demand for model training and related services on cloud infrastructure, which were only partially fulfilled due to the near-term supply chain constraints globally,” Chairman and Chief Executive Officer Daniel Zhang, who steps down in September, told analysts on a conference call. He will focus on Alibaba’s cloud business full-time after ceding his dual roles to Alibaba co-founders Joseph Tsai and Eddie Wu.

A shortage of high-powered semiconductors is undermining Chinese efforts to keep pace with the US in AI. Washington has banned Chinese firms from buying the most advanced chips made by Nvidia Corp., impeding attempts to build rivals to OpenAI’s ChatGPT. Nvidia has since created an inferior version of its most potent A100 chips for the country, and major Chinese tech firms including Alibaba have reportedly placed billions of dollars’ worth of orders.

The Biden administration on Wednesday announced new rules to partially limit American firms’ investments in quantum computing and AI sectors in China, which could further disadvantage the Asian country in its ambition to advance its technological capabilities.

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