Alibaba tests AI chip as China pushes domestic chips in Nvidia talks

Chinese e commerce giant Alibaba is testing a new artificial intelligence processor as Beijing pushes to reduce reliance on U.S. chips, even as U.S. officials and Nvidia hold talks over whether a watered down next generation Nvidia chip can be sold into China, company executives and people familiar with the discussions said this week. The developments deepen a contest over advanced AI hardware that has intensified since Washington restricted exports of the most powerful American processors in 2023.

People familiar with Alibaba’s work said the new chip, now in testing, is built at a Chinese fabrication facility and is designed to handle a broader range of AI inference tasks than the company’s earlier processor. The chip is intended to serve domestic developers and cloud customers, and some reports indicate it will be compatible with widely used AI software ecosystems. Alibaba did not immediately respond to requests for comment.

The push by Alibaba and other Chinese firms follows a series of U.S. export controls that barred Nvidia’s top Blackwell chips from China earlier this year. Nvidia’s lower powered H20 model was briefly blocked and then allowed back into the market under...