Alibaba Ramps AI Chip Sales, Plans Second-Generation Tape-Out

Pingtouge, Alibaba Group’s semiconductor unit, is central to the company’s push to secure more of the computing capacity underpinning Alibaba Cloud. Developing in-house processors could reduce reliance on external high-end chips as demand from generative AI workloads accelerates. AI products have become the cloud division’s main growth engine, making chip supply, computing performance and high-speed interconnects increasingly important to Alibaba’s ability to expand its infrastructure and serve large-model developers.

Alibaba Chief Executive Officer Eddie Wu said the company’s Zhenwu M890 AI processor is already being sold at scale through Alibaba Cloud, with shipments set to increase further in the second half of 2026. A second-generation domestic chip offering greater computing power and interconnect bandwidth is scheduled to begin tape-out during the same period and is intended to support large-model training. Alibaba Cloud’s AI-related products are expected to approach $10 billion in annualized revenue.