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Alibaba is reportedly working on a new processor designed specifically for artificial intelligence, according to people familiar with the project. The chip, still under testing, is intended for inferencing—the process of running AI applications—rather than training large-scale models.
The Wall Street Journal first reported the development, noting that unlike earlier Alibaba chips fabricated by Taiwan Semiconductor Manufacturing Company (TSMC), this processor is being produced in mainland China. The move underscores Beijing's growing efforts to reduce reliance on foreign suppliers amid ongoing technology tensions with the United States.
U.S. export restrictions have made high-end processors harder for Chinese firms to acquire. Nvidia's H20 chip, a reduced-power version designed for China to comply with Washington's rules, was temporarily blocked from sale earlier this year before restrictions were eased. Still, Nvidia said this week it has yet to ship any H20 units to China.
Despite its new chip push, Alibaba will continue sourcing semiconductors from international players like Nvidia, which dominates both AI training and inference markets. Nevertheless, Chinese firms such as Huawei and Baidu are accelerating their own semiconductor programs to fill potential gaps.
Alibaba has long invested in chip design through its T-Head division. Its last inference processor, the Hanguang 800, was released in 2019. These chips typically power servers in data centers, where they handle AI workloads such as image recognition, natural language processing, and recommendation engines.
The Hangzhou-based giant recently pledged to spend 380 billion yuan (about $53 billion) over the next three years on AI infrastructure. Those efforts are already translating into financial gains: in its latest earnings, Alibaba's cloud unit reported a 26% year-on-year revenue increase, with AI-related services marking their eighth consecutive quarter of triple-digit growth.
The news of Alibaba's chip project, combined with strong earnings, helped lift its stock nearly 12% on Friday. By contrast, Nvidia's shares slipped more than 3% in early U.S. trading, extending recent losses.
