TECH giant Alibaba Group Holding Ltd. has unveiled a new artificial intelligence (AI) chip designed to address the growing void left by U.S. restrictions on Nvidia Corp.’s high-end processors in China. The chip, currently in testing, focuses on AI inference tasks — processing data through trained models — rather than the resource-intensive training of AI systems.

According to media reports, the new chip is more versatile than Alibaba’s previous offerings, capable of handling a broader array of inference workloads. It’s being manufactured by a Chinese mainland firm, marking a shift from earlier reliance on Taiwan Semiconductor Manufacturing Co. (TSMC), which produced Alibaba’s prior AI processors.

Alibaba, a major player in cloud computing and e-commerce, was once one of Nvidia’s largest customers, using its GPUs to power generative AI models like Qwen. However, U.S. export controls imposed in recent years have curtailed sales of Nvidia’s most advanced chips, such as the H100 and Blackwell series, to Chinese entities. Nvidia responded by developing the less powerful H20 chip specifically for the Chinese market.

The new Alibaba chip is engineered for interoperability with Nvidia’s programming ecosystem, including CUDA software, allowing developers to adapt existing code with minimal changes. As noted in a discussion on Reddit’s r/LocalLLaMA forum, this compatibility could make it a “drop-in replacement,” though experts caution it may introduce performance bottlenecks compared to Nvidia’s hardware.

Alibaba has a semiconductor design arm called T-Head and previously released the Hanguang 800 inference chip in 2019. The new chip will not be sold, but customers can rent computing power from Alibaba.

Alibaba’s cloud-intelligence unit reported a 26% revenue jump in the April-June quarter, driven by AI demand, but margins remain squeezed at 8.8%, below the company’s average.

Meanwhile, companies like Huawei Technologies Co. and Cambricon Technologies Corp. are also developing AI chips, with Huawei’s Ascend series gaining traction despite U.S. sanctions.

(SD-Agencies)