Chinese technology company Alibaba is developing a new artificial intelligence chip designed for inference applications, according to CNBC. The semiconductor focuses on running AI applications rather than training large models. Two sources familiar with the matter confirmed the development to CNBC. The Wall Street Journal first reported the news of the chip, which has not officially launched.

Alibaba declined to comment when contacted by CNBC. The company previously released the Hanguang 800 inference chip in 2019. These chips operate in data center servers to process AI workloads. Alibaba announced plans to invest at least 380 billion Chinese yuan ($53.1 billion) over the next three years in AI infrastructure. The company's cloud division reported 26% year-over-year revenue growth, with AI-related product revenue maintaining triple-digit growth for eight consecutive quarters.

Why This Development Matters

This chip development represents China's push toward technological self-sufficiency amid escalating US export restrictions. The Biden administration imposed comprehensive controls on advanced semiconductor exports to China in October 2022, according to CSIS. These restrictions targeted high-performance chips used for AI applications and supercomputing.

Chinese companies face reduced access to cutting-edge foreign semiconductors, particularly Nvidia's advanced AI chips. Euronews reports that the US banned Nvidia from selling its most powerful Blackwell chips to China in April 2025. China reportedly told local tech companies to stop purchasing American Nvidia chips in August, citing security concerns. This creates urgent pressure for domestic alternatives to maintain AI development capabilities.

Industry Response to Export Controls

Chinese technology companies are adapting to export restrictions through multiple strategies. CNBC reports that Tencent maintains a "strong stockpile" of previously purchased graphics processing units. The company explores custom-designed chips and domestically available semiconductors. Baidu promotes its "full-stack" AI capabilities combining cloud infrastructure, AI models, and applications.

Companies ordered between $12 billion and $16 billion worth of Nvidia H20 processors in early 2025 before shipments ended, according to Asia Times. Chinese firms including ByteDance, Alibaba, and Tencent suspended Nvidia chip purchases pending national security reviews. Huawei emerged as a key domestic semiconductor alternative, with its Ascend 910C chip expected to perform comparable to Nvidia's H100 at 60-70% of the cost, ITIF notes.

Chinese government investment supports this transition. Beijing created a 344 billion yuan ($47.5 billion) semiconductor investment fund in 2024, following similar investments since 2014. Local governments provide additional funding, with Guangzhou committing over $21 billion in 2023 for domestic chip adoption. The government targets 80% localization of Chinese chip consumption by 2030 under its Made in China 2025 guidance.

Further Reading

For deeper insights into global adoption trends, our Alternative Financial Systems Index tracks regulatory frameworks and adoption metrics across 50 countries. The index provides comprehensive analysis of how different nations approach emerging technologies and regulatory responses.