Alibaba develops new AI chip as China seeks to cut reliance on Nvidia

The new chip, still under testing, has been manufactured in China, unlike Alibaba's earlier version, which was fabricated by TSMC

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Amid intensifying competition in artificial intelligence (AI), Chinese tech giant Alibaba has developed a new chip touted as more versatile than its predecessors, The Wall Street Journal reported on Friday.

 

The new chip, which is still undergoing testing, has been manufactured in China, unlike Alibaba’s earlier version, which was fabricated by the Taiwan Semiconductor Manufacturing Company (TSMC). It is designed to handle a broader range of AI inference tasks, the report added.

 

China ramps up chip output

Chinese companies have been focusing on developing homegrown AI chips to meet rising demand. A recent Financial Times report noted that they are aiming to triple the country’s AI chip output by 2026.

 

This comes as Beijing steps up efforts against US tech giant Nvidia’s H20 chip. The Trump administration blocked the sale of H20 chips in China earlier this year but lifted restrictions last month, reopening the Chinese market for Nvidia.

 

Soon after, Chinese authorities raised concerns over the H20, citing risks of “information leaks” and potential backdoors that could allow remote access. An advisory was later issued to major firms such as Tencent, ByteDance, and Alibaba to suspend H20 orders, creating a gap in AI chip supply.

 

In response, Chinese players including Huawei, Semiconductor Manufacturing International Corporation (SMIC), Shanghai-based MetaX, Cambricon Technologies, and Alibaba have accelerated efforts to advance and expand chip production.

 

Persistent challenges in chipmaking 

Despite these efforts, industry insiders told the WSJ that China remains far from producing chips comparable to the most advanced US products, which face strict export restrictions from Washington.

 

Nvidia’s H20, the most powerful chip permitted for sale in China, also lacks the computing power of its H100 or Blackwell series, Reuters reported. The absence of cutting-edge chipmaking technology in Chinese factories continues to limit domestic production capabilities.