Chinese tech giant Alibaba aims to fill Nvidia void with its new AI chip

Alibaba has developed a new, more versatile AI chip designed for a wider array of inference tasks. This chip is currently undergoing testing and is manufactured by a Chinese company, unlike a previous Alibaba AI processor made by TSMC. This development occurs as Chinese tech firms prioritize domestic technology amid US restrictions on Nvidia's advanced AI chips. Nvidia's H20 chip, intended for the Chinese market following earlier export bans, faced its own sales impediments. Although the US has since permitted Nvidia to resume H20 sales to China, Chinese companies are actively seeking alternatives. Beijing has also reportedly encouraged tech giants like Alibaba to reduce their reliance on the H20. Nvidia had specifically created the H20 to comply with US export controls, offering less power than its H100 or Blackwell series. Alibaba, a major cloud computing provider and significant Nvidia customer, reported a strong 26% revenue increase in its cloud segment for the April-June quarter. This growth was driven by robust demand, exceeding market expectations.