China’s Alibaba unveils new AI chip to counter US tech restrictions

E-commerce and cloud computing giant Alibaba has announced the development of a new artificial intelligence chip, a move that signals China's accelerating effort to reduce its reliance on US technology and establish a self-sufficient semiconductor ecosystem.

The new chip, developed by Alibaba's T-Head semiconductor division, is designed for AI "inference" tasks, which involve running and applying AI models, a less computationally intensive process than training them.

The new chip comes as Chinese tech companies face increasing pressure from Beijing to secure domestic supply chains amidst ongoing US export restrictions on advanced semiconductors. While Washington has recently allowed some sales of Nvidia's lower-spec H20 chips to China, the government has advised Chinese firms to exercise caution, citing potential security risks. This has prompted a nationwide push for homegrown alternatives.

A focus on pragmatism over performance

According to sources familiar with the project, the new chip is now in testing and is designed to be more versatile than previous Alibaba processors. A key aspect of its design is its compatibility with widely used software frameworks like CUDA and PyTorch, which are dominant in the AI development community.

This allows developers to more easily migrate their existing code to the new hardware, a pragmatic approach that prioritizes usability over raw performance.

Crucially, the new chip is being manufactured by a Chinese company, a significant shift from an earlier Alibaba AI processor that was fabricated by Taiwan Semiconductor Manufacturing Co. (TSMC). This change underscores China's focus on building a fully domestic supply chain that is insulated from future US export controls.

Alibaba has committed to a massive investment of over $53 billion over the next three years to build out its AI and cloud infrastructure, with the new chip being a central part of that strategy. The company will not sell the chips externally but will use them to power its cloud services, strengthening its competitive position in China's rapidly growing AI market.

China slowly catching up

This move by Alibaba is part of a broader trend among Chinese tech giants. Companies like Huawei, Baidu, and a host of smaller players are all racing to develop domestic alternatives to Western technology. While China still lags behind the US in advanced chip manufacturing, these efforts represent a determined and well-funded push to secure its technological future on its own terms.