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Alibaba Set to Launch Its Own Chip Business

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Alibaba’s latest venture

Chinese technology giant Alibaba (BABA) announced yesterday, September 19, that it will be starting its own chipmaking business. It will be developing embedded processors and AI chips for cloud computing and other sectors.

The venture is driven by Alibaba’s research and development division, Damo Academy. It’s expected to expand Alibaba’s cloud and Internet of Things businesses.

Alibaba has been investing in chip companies, including C-Sky, a chip design company, earlier this year.

The company’s CEO Jack Ma previously said China needs to address its heavy reliance on US-made chips, especially given the escalating trade war between the two countries.

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Alibaba’s in-house chips could complement its fast-growing cloud business

Alibaba’s cloud business has been growing at a very fast pace. In the most recent quarter, its cloud business grew 93% year-over-year. While that represented a slowdown in growth, the business continues to gain market share in the fast-growing global cloud market.

While Alibaba is far behind Amazon (AMZN) and Microsoft (MSFT), it’s gaining ground and could soon leapfrog IBM (IBM) in terms of market share in global cloud infrastructure.

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