Alibaba sells Lingxi Games to focus on AI and cloud

Alibaba Group has agreed to sell its wholly-owned gaming subsidiary, Lingxi Games, to Asian private equity firm Trustar Capital in a deal that could value the studio at more than $1.5 billion. The transaction, announced via an internal memo on Monday, August 17, marks a significant step in the Chinese technology giant's strategic pivot away from noncore sectors to concentrate resources on artificial intelligence and cloud computing.

According to the memo, which was reviewed by multiple outlets and signed by Lingxi CEO Zhou Bingshu, Alibaba has decided to hand over full ownership of the gaming unit to Trustar Capital. This move allows Alibaba to "better focus on its strategic priorities," Zhou stated. The financial terms were not officially disclosed, though sources familiar with the matter indicated the deal is expected to value Lingxi at over $1.5 billion, with one source suggesting it could exceed $2 billion. The sale is subject to regulatory approvals and other conditions.

The divestiture is a key component of a broader corporate restructuring underway under Alibaba CEO Eddie Wu. The company has been systematically pruning non-core assets to funnel capital into its core...