Alibaba Unveils Advanced AI Chip to Compete with Nvidia in China
Aug 29, 2025
Alibaba has developed a new artificial intelligence (AI) chip designed to handle a wide range of AI tasks. This development aims to help reduce China’s dependence on chips from U.S. companies such as Nvidia.
The new chip is more versatile than Alibaba’s previous models and is expected to support various AI applications. This move is part of a broader push backed by the Chinese government to boost the country's domestic technology industry.
The news has had an impact on the stock market. While Alibaba’s shares have risen over 40% this year, the announcement put pressure on Nvidia’s stock and contributed to recent market changes in the AI and technology sectors.
Why is Alibaba making its own AI chip?
Alibaba wants to reduce its reliance on American technology and provide more options for AI development in China, especially as U.S. export restrictions make it harder to buy certain chips from companies like Nvidia.
What does this mean for Nvidia?
Alibaba's new chip increases competition for Nvidia in China, which could affect Nvidia's sales in that market.
How are investors reacting to this news?
After Alibaba's announcement, Nvidia’s stock dropped below a key trading level, and there was increased market volatility in technology shares.
Will Alibaba’s new chip affect its business?
The new chip may strengthen Alibaba's position in AI and technology, and could support its growth in cloud computing and other tech-related areas.
Sources
Alibaba Earnings Are Coming. AI, Price Wars, and Tariffs Could Leave Their Mark.
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Alibaba, often seen as a bellwether for the Chinese economy, has seen shares outperform the Chinese stock market this year, rising more than 40%.
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China's Alibaba , has developed a new chip that is more versatile than its older chips and is meant to serve a broader range of AI inference tasks, the Wall Street Journal reported on Friday, citing people familiar with the matter.
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