Alibaba Tests New AI Chip as China Seeks Nvidia Alternatives

Alibaba (BABA, Financials) is testing a new artificial intelligence chip that could give Chinese firms more options as access to Nvidia hardware remains restricted, the Wall Street Journal reported Friday.

The chip is built by a Chinese manufacturer and is more versatile than Alibaba's earlier AI processor, which had been fabricated by Taiwan Semiconductor Manufacturing. It is intended to handle a wider range of AI inference work, according to the report.

The push comes as Beijing pressures Chinese tech companies, including Alibaba and ByteDance, to reduce reliance on Nvidia's H20 chip. The H20 is the most powerful AI processor Washington still allows to be sold in China, but sales were effectively halted earlier this year before a partial resumption last month.

Alibaba, which runs China's largest cloud computing business and is a major Nvidia customer, reported this week that its cloud revenue jumped 26% in the June quarter.