Alibaba’s cloud has silver lining for Chinese chips

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A view of the Alibaba Group headquarters in Hangzhou, Zhejiang province, China on October 26, 2020. Photo taken on October 26, 2020. REUTERS / Aly Song – RC2QQJ90JVKP

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HONG KONG, Oct. 19 (Reuters Breakingviews) – Alibaba (9988.HK) offers promising insight into China’s chipmaking potential. The $ 450 billion e-commerce group on Tuesday unveiled a self-developed processor for its fast-growing cloud computing unit. The chip, which will be used to power its own data center servers, boasts cutting edge technology. It’s a strategic victory if the leading cloud provider in China doesn’t depend on American chip designers like Intel (INTC.O). Amazon’s AWS (AMZN.O) launched its own processor three years ago.

Alibaba is part of a growing cohort of tech companies in the People’s Republic that are venturing more into semiconductors, in part stimulated by President Xi Jinping’s goal of achieving self-sufficiency in high-tech sectors . In August, search engine operator Baidu (9888.HK) announced that it had started mass production of its artificial intelligence chips, while handset maker Xiaomi (1810.HK) launched into similar projects. Alibaba’s efforts will attract the right kind of official review. (By Robyn Mak)

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Editing

Reuters Breakingviews is the world’s leading source for financial information on agenda making. As the Reuters brand for financial commentary, we dissect the big companies and economic stories from around the world every day. A global team of around 30 correspondents in New York, London, Hong Kong and other major cities provide real-time expert analysis.

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