With US restrictions limiting Nvidia’s sales to China, Alibaba and other domestic companies are moving to fill the niche with home-grown technology, including Alibaba’s new AI chips. Alibaba is testing a chip built for AI inference workloads but not for AI training, according to The Wall Street Journal.
Alibaba, best known as a business-to-business e-commerce platform, was once a major Nvidia customer. Its generative AI model, Qwen, competes with OpenAI and other leading AI developers.
Alibaba chip designed for Nvidia compatibility
The new chip is interoperable with Nvidia’s programming platform, meaning software written for Nvidia chips can be adapted to run on the Alibaba chip, The Wall Street Journal reported. The Alibaba chip will be manufactured by a Chinese company.
Alibaba previously relied on Taiwan Semiconductor Manufacturing (TSMC) for its AI processors. But in 2025, the US imposed new import controls restricting chipmakers from providing cutting-edge services to China.
AI and cloud are two of the three pillars of Alibaba’s business, along with e-commerce, Chief Executive Eddie Wu told The Wall Street Journal. The company plans to invest $53 billion over the next three years in AI and cloud development.
Chinese companies find footing without Nvidia
With AI chipmaking emerging as a high-stakes technology race, tensions between the US and China play out in a proxy fight in engineering labs. Even if Nvidia resumes selling its downgraded H20 chips to China, some companies may avoid them due to government concerns about potential security risks. Nvidia has denied such risks exist.
Other Chinese semiconductor companies may seek to fill the niche left if US companies are inaccessible. Huawei produces powerful Ascend AI chips, which some analysts claim have outperformed Nvidia’s Blackwell system on certain metrics, according to The Wall Street Journal.
Shanghai-based MetaX makes a domestic equivalent to Nvidia’s H20 by combining two of its smaller chips. Another Chinese company seeing its fortunes rise in Nvidia’s place, Cambricon, has seen a sharp increase in its revenue over the past year, reaching $247 million in April-June. Its AI chip, Siyuan 590, is said to rival Nvidia’s H100.
OpenAI and Anthropic stress-tested each other’s AI models to determine the rate of hallucinations and other metrics.