Alibaba Group Holding Ltd. is preparing to take its chipmaking division public. The move taps into strong investor interest in companies competing with Nvidia in the AI accelerator market.
Alibaba Group Holding Limited, BABA
The company plans to restructure T-Head as a business partly owned by employees first. After that, it will explore an initial public offering. The timing for the IPO remains unclear at this stage.
Alibaba’s U.S.-listed shares jumped 4.6% in premarket trading after the news broke. The company did not immediately respond to requests for comment about the plans.
T-Head Semiconductor was founded in 2018 as Alibaba’s wholly owned chip unit. The division develops processors ranging from data center and AI chips to Internet-of-Things products. It handles the full chip design stack.
The company is still in early stages of the process. How much T-Head could be valued at remains unknown. But debuts by rival chipmakers like Moore Threads Technology have drawn strong interest from investors.
T-Head is showing signs of progress in securing customers. The unit recently signed a contract with China’s No. 2 wireless carrier to deploy its Pingtouge AI accelerators.
The chips will be installed in the mobile operator’s new data center in northwestern China. They’ll sit alongside accelerators from rivals MetaX Integrated Circuits and Biren Technology.
Alibaba has long explored chip design to secure components for its data centers and cloud services. AI chips represent one part of a broader push to become a leading AI company rivaling OpenAI.
CEO Eddie Wu has pledged more than $53 billion toward infrastructure and AI development. He’s said the company could surpass that amount over time.
The company revamped its mobile app Qwen in November as a major step into consumer-facing AI services. In January, it linked its flagship online shopping and travel services to Qwen.
This marked its biggest step yet to build Qwen into a one-stop AI platform for consumers. The plan is to gradually integrate individual services under the Alibaba umbrella.
Alibaba’s chip project mirrors efforts at other major Chinese tech firms like Baidu. These companies are exploring their own AI silicon as advanced Nvidia chips remain banned from the country.
Nvidia’s AI accelerators are considered the gold standard for training cutting-edge models from OpenAI and Anthropic. Chinese firms are working to develop alternatives.
The restructuring as an employee-owned business could help attract and retain talent in the competitive chip design field. This structure is common before tech IPOs in China.
T-Head develops a range of processors across the full chip design stack from data center and AI chips to Internet-of-Things products.
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