TAIPEI (BLOOMBERG) - Alibaba Group Holding has successfully developed its own microchip, delving deeper into semiconductors just as Washington targets China's tech industry.
The e-commerce giant joins a series of giant Chinese corporations such as Huawei Technologies that are creating alternatives to foreign software and hardware.
Alibaba on Thursday (July 25) unveiled the Xuantie 910 processor based on an open-source design known as RISC-V that competes with the global standard developed by SoftBank Group's ARM.
The new chip may mark a licensing business for Alibaba, which will make some of its software tools publicly available but charge for full features.
Xuantie is the first fully formed product to emerge from a chip-making subsidiary Alibaba set up last year to power its foray into cutting-edge circuity.
Led by the unit T-head or Pingtouge, it's part of the company's expansion into artificial intelligence and development of pivotal technology for the Internet of Things (IoT). If its chip business succeeds, it could introduce a new revenue stream and drive its burgeoning cloud services division.
"Trade war has also bolstered China's determination to become more independent when it comes to technology," Sanford C. Bernstein analyst Mark Li said. "Alibaba's backing of RISC-V may threaten the businesses of existing chip intellectual property companies."
Alibaba, however, may be late to the game. Microsoft and Google had already launched in-house silicon teams, deploying the hardware for their server farms and as add-ons to their own cloud services. The specialised demands of cloud and AI capabilities made in-house manufacturing more practical, despite the expense.
Alibaba joins a coterie of Chinese corporations that are collectively aiming to reduce the country's overwhelming dependence on foreign chips - an imbalance brought into focus by curbs on the sale of US technology to Huawei.
China today imports roughly three times as many chips as it produces domestically, and spends more on semiconductors than it does on oil. Washington is keeping close tabs on China's advances in chip design, which have the potential to accelerate a shift in how the world's computing hardware gets produced.
Chinese companies have never rivalled the US, Taiwan, and South Korea in manufacturing the most advanced chips, but it has the capabilities to design cutting-edge chips as demonstrated by Huawei unit HiSilicon. It could in theory stake out a position in so-called AI semiconductors: silicon designed to handle tasks such as object detection and voice recognition.
Xuantie "is designed to serve a lot more heavy-duty IoT applications" from self-driving cars to networking and server computing, Alibaba said in a statement. "The new processor would also help drive the growth of the RISC-V open-source community in Asia and globally."