Alibaba Scores Major Win in China's AI Chip Market with Unicom Deal

Alibaba has secured a significant win in China's AI chip race with China Unicom deploying its T-Head accelerators in a massive data center buildout. This marks a breakthrough moment for Alibaba's semiconductor push, as it challenges domestic leaders like Huawei and Cambricon while reducing exposure to Nvidia designs. Alibaba is investing $53.5 billion in infrastructure over three years to build AI capacity and carve out a larger share of China's next-generation cloud and compute stack.

Alibaba Group Holding Ltd. (BABA) has made a significant stride in China's AI chip race by securing a deal with China Unicom (0762.HK) to deploy its T-Head AI accelerators in a massive data center buildout. This strategic move marks a pivotal moment for Alibaba's semiconductor push, positioning it to challenge domestic leaders like Huawei and Cambricon while reducing its reliance on Nvidia Corp. designs Alibaba AI Chip Effort Quickens With Big Client China Unicom^[1].

The contract with China Unicom, one of China's largest wireless carriers, indicates growing adoption of Alibaba's semiconductor products. The T-Head AI accelerators will be integrated into Unicom's new data center in northwestern China, alongside accelerators from rivals MetaX and Biren Technology Co. Alibaba AI Chip Effort Quickens With Big Client China Unicom^[1]. This deployment is part of Alibaba's broader effort to invest $53.5 billion over three years in AI infrastructure, aiming to carve out a larger share of China's next-generation cloud and compute stack Alibaba AI Chip Effort Quickens With Big Client China Unicom^[1].

Alibaba's semiconductor unit, T-Head, is designed to compete with Huawei's Ascend series and Cambricon Technologies Corp. The company is aiming to reduce its dependence on Nvidia's AI accelerators, which are considered the gold standard in the industry. Unicom's data center will utilize Alibaba's AI chips, which reportedly offer superior hardware specifications compared to Huawei's Ascend 910B, including more advanced memory Alibaba AI Chip Effort Quickens With Big Client China Unicom^[1].

The deal comes amidst a broader trend of Chinese tech firms exploring their own AI silicon due to the ban on Nvidia's AI accelerators in China. Baidu Inc., for instance, has secured a 1 billion yuan contract to provide China Mobile with servers powered by its Kunlun chips Alibaba AI Chip Effort Quickens With Big Client China Unicom^[1]. Alibaba's efforts are part of a nationwide race to develop AI and the infrastructure that supports it, with the involvement of co-founder Jack Ma in various aspects of the business Alibaba AI Chip Effort Quickens With Big Client China Unicom^[1].

This strategic move is a notable achievement for Alibaba, which is also investing in AI platforms to compete globally with OpenAI and DeepSeek. The company recently released an open-source Tongyi Deep Research model, further underscoring its commitment to AI innovation Alibaba AI Chip Effort Quickens With Big Client China Unicom^[1].