Alibaba has developed a new AI chip designed to handle a broader range of inference tasks, marking a significant shift toward domestic semiconductor production as the chip is being manufactured entirely in China. This development represents a strategic pivot away from foreign suppliers like Taiwan Semiconductor Manufacturing Company (TSMC), which produced Alibaba’s earlier AI processors, and aligns with Beijing’s broader push for technological self-sufficiency amid ongoing U.S. export restrictions.
What you should know: The new chip is currently undergoing testing and represents Alibaba’s latest effort to reduce dependence on foreign AI semiconductor suppliers.
- Unlike previous generations of Alibaba’s AI processors that were fabricated by TSMC, this new chip is being manufactured domestically in China.
- The processor is specifically designed to handle a wider set of inference tasks, potentially making it more versatile than earlier versions.
In plain English: AI inference chips are specialized processors that help computers make predictions or decisions based on data they’ve already learned from—like how your phone recognizes your face or how streaming services recommend movies. Manufacturing these chips domestically means China can control its own supply chain rather than relying on foreign companies.
The big picture: Chinese technology companies are accelerating domestic chip development as U.S. export controls create supply chain uncertainties and push Beijing toward semiconductor independence.
- The U.S. government blocked sales of Nvidia’s H20 chip earlier this year, despite it being specifically designed to comply with export controls for Chinese customers.
- In August, the Trump administration struck a deal allowing Nvidia to sell H20s in China, provided that 15% of those revenues go to the U.S. government.
- Chinese authorities have discouraged domestic companies from deploying the H20 chip, particularly in government and security-related projects, and instructed major firms like Alibaba, ByteDance, and Tencent to pause H20 purchases during a national security review.
Competitive landscape: Nvidia continues developing China-specific processors while Chinese companies race to create viable alternatives.
- Nvidia is reportedly preparing a new AI chip for the Chinese market called the B30A, which will outperform the H20 model with a single-die design integrating all major components onto one piece of silicon.
- The B30A is expected to provide about half the computing power of Nvidia’s dual-die Blackwell Ultra GPUs.
- China is requiring its data centers to adopt more domestically produced chips, with state-owned computing hubs instructed to ensure over half their chips come from domestic manufacturers.
What they’re saying: Nvidia CEO Jensen Huang remains optimistic about Chinese market opportunities despite ongoing restrictions.
- “The opportunity for us to bring Blackwell to the China market is a real possibility,” Huang said during Nvidia’s latest earnings call.
- “We just have to keep advocating the importance of American tech companies to be able to lead and win the AI race, and help make the American tech stack the global standard.”
- Huang estimated China’s AI market could expand by 50% next year, representing a $50 billion opportunity in 2025.
Alibaba tests new AI chip as China seeks Nvidia alternatives