Alibaba Creates New AI Chip Amidst Nvidia's Absence in China

Alibaba has developed a new AI chip to fill Nvidia's absence in China, according to a Wall Street Journal report. The new chip is more versatile than Alibaba's previous chips and was developed after the company's long-standing relationship with Nvidia ended. Alibaba was one of Nvidia's biggest customers in China.

Alibaba has developed a new AI chip aimed at filling the gap left by Nvidia in the Chinese market, according to a report by the Wall Street Journal [1]. The new chip, currently in testing, is manufactured by a Chinese company, marking a shift from Alibaba's earlier AI processor that was fabricated by Taiwan Semiconductor Manufacturing (TSMC) [2].

The new chip is designed to handle a broader range of AI inference tasks compared to Alibaba's previous AI processors, making it more versatile [1]. This development comes at a time when Chinese tech companies, including Alibaba and ByteDance, have been pressured by Beijing to avoid purchasing Nvidia's H20 chip due to security concerns [1].

Nvidia's H20 chip, which is the most powerful AI processor it is allowed to sell in China, was effectively blocked from sale earlier this year by the Trump administration [2]. The U.S. last month allowed Nvidia to resume sales of the H20 to China, but Chinese firms have been working on processors to substitute the H20 [1]. Nvidia developed the H20 specifically for China following U.S. export restrictions on its other AI processors in 2023 [1].

Alibaba separately reported a 26% jump in revenue in its cloud computing segment for the April-June quarter, beating market estimates [2]. This growth is attributed to solid demand for cloud computing services. The development of the new AI chip further underscores Alibaba's commitment to advancing its technology capabilities and reducing reliance on foreign chip suppliers [2].

References:
[1] https://www.ainvest.com/news/nvidia-shares-drop-1-7-wsj-reports-alibaba-develops-ai-chip-fill-nvidia-void-china-2508/
[2] https://www.investing.com/news/stock-market-news/chinas-alibaba-develops-new-ai-chip-to-help-fill-nvidia-void-wsj-reports-4216068