China is using the private sector to advance military AI - WSJ

China is using the private sector to advance military AI - WSJ

China is increasingly relying on its private sector to bolster its military AI capabilities, as reported by the Wall Street Journal. This strategic shift is part of Beijing's broader push to reduce its dependency on foreign technology and build a self-sufficient AI supply chain. The move comes amidst ongoing U.S. restrictions on advanced chips and semiconductors, which have created a void that Chinese firms are eager to fill.

The WSJ report highlights that Alibaba Group Holding Ltd (BABA), one of China's largest cloud-computing companies, is developing a new AI chip to address the gap left by Nvidia (NVDA) in the Chinese market. This new chip, currently in testing, is manufactured by a Chinese company, marking a significant shift from Alibaba's earlier AI processors that were fabricated by Taiwan Semiconductor Manufacturing (TSMC) [1].

The new AI chip is designed to handle a broader range of AI inference tasks compared to Alibaba's previous processors. This development aligns with China's broader push to build a self-sufficient AI supply chain amidst U.S. restrictions on advanced chips [4]. Alibaba's investment in AI is not only aimed at filling the void left by Nvidia but also at reducing its reliance on foreign chip suppliers, a move that underscores Beijing's strategic focus on technological independence.

Alibaba's stock has surged nearly 15% in recent days, fueled by strong performance in its AI segment and a 26% increase in sales in its cloud division. This growth is attributed to solid demand for cloud computing services and Alibaba's leadership in AI development [2]. The company's focus on AI is evident in its investments in large language models and its commitment to developing artificial general intelligence (AGI), as highlighted by CEO Eddie Wu [2].

The development of the new AI chip further underscores Alibaba's commitment to advancing its technology capabilities and reducing its reliance on foreign chip suppliers. This strategic move is part of a broader trend in China, where private firms are being encouraged to play a more significant role in advancing military AI capabilities. The WSJ report suggests that this shift is driven by a desire to reduce China's dependence on foreign technology and to build a more self-sufficient AI ecosystem.

The implications of this shift are significant for both China and the global AI market. For China, the development of a self-sufficient AI supply chain could lead to significant advancements in military AI capabilities. For the global AI market, this shift could lead to increased competition and innovation as Chinese firms seek to fill the void left by Nvidia and other foreign tech companies.

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3UL0LA:0-china-s-alibaba-develops-new-ai-chip-to-help-fill-nvidia-void-wsj-reports/
[2] https://finance.yahoo.com/news/chinas-alibaba-develops-ai-chip-090846681.html