Alibaba’s Breakthrough in Self-Developed AI Chips: A Booming Opportunity for the Domestic Computing Power Industry Chain

Alibaba’s new generation AI chip adopts domestic foundry and is compatible with the NVIDIA ecosystem, benefiting companies like Cambricon and SMIC directly. A new investment of 380 billion yuan will reshape the domestic computing power landscape.

Through its subsidiary, Tsinghua Unigroup, Alibaba has developed and tested a new generation of chips aimed at AI inference. This chip is not only compatible with the NVIDIA software ecosystem (CUDA) but is also entirely produced by domestic companies. This move aims to reduce dependence on foreign chips (especially NVIDIA) while further consolidating its dominant position in the Chinese cloud computing market. At the same time, Alibaba announced a plan to invest 380 billion yuan over the next three years in cloud and AI hardware infrastructure, focusing on areas such as chips, computing power infrastructure, liquid cooling technology, and industry applications.

01 Alibaba’s Chip Strategy: Self-Development + Ecosystem Dual-Drive

Alibaba’s chip strategy revolves around three core areas: self-developed AI chips, RISC-V ecosystem construction, and full-stack technology layout. In terms of AI chips, Alibaba focuses on cloud-based AI training and inference chips, aiming to reduce reliance on NVIDIA GPUs. The representative product is the Hanguang 800 series, which performs several times better than GPUs and is widely used in Alibaba Cloud data centers. The new generation AI chip is primarily aimed at inference tasks, compatible with the NVIDIA ecosystem, and produced by domestic foundries. In the RISC-V ecosystem, Tsinghua Unigroup has launched the Xuantie series processors, becoming a significant promoter of the global RISC-V architecture. The Xuantie processors have shipped over 3 billion units, with more than 200 ecosystem partners. The full-stack technology layout covers a complete technology stack from chip design to computing power infrastructure, establishing a complete system of “chip-server-data center-cloud service”.

02 Chip Design and Manufacturing: Core Links for Domestic Substitution

In the fields of chip design and manufacturing, several domestic listed companies are deeply involved in Alibaba’s AI chip ecosystem. Cambricon (688256), as the core supplier of Alibaba Cloud’s AI inference chips, has its Siyuan 590 chip deeply adapted to Alibaba Cloud servers. In the second quarter of 2025, it received a 1 billion yuan order from Alibaba, becoming a significant force in the domestic AI chip substitution for NVIDIA. Hygon Information (688041)‘s Shenxuan DCU series GPUs are compatible with the CUDA ecosystem and have clear demand for replacing NVIDIA’s A100. The company is jointly developing the next generation training card with Alibaba, expecting a 287% growth in AI chip revenue in 2024. Chipone (688521) provides RISC-V GPU IP licensing to Tsinghua Unigroup, covering smart home and automotive electronics. In Q1 2025, revenue grew by 69%, securing multiple Alibaba ecosystem project orders in the AIoT field. In the chip manufacturing and packaging testing segment, SMIC (688981), as the largest domestic wafer foundry, undertakes the mass production of Alibaba’s AI chips using 6nm technology, achieving commercial yield standards. JCET (600584) is Alibaba’s exclusive packaging and testing supplier, using SiP/3D packaging technology, with a monthly production capacity exceeding 5 million units.

03 Computing Power Infrastructure: Explosive Demand for Servers and Optical Modules

Alibaba’s 380 billion yuan investment plan directly benefits the computing power infrastructure sector, with strong demand for servers, optical modules, and IDC. Data Harbor (603881) is Alibaba Cloud’s core supplier for customized IDC, undertaking over 20 data centers, with Alibaba Cloud revenue accounting for more than 80%. Its liquid cooling technology reduces PUE to as low as 1.15, with an expected addition of over 5,000 new cabinets by 2025. Inspur Information (000977), as the main supplier of Alibaba’s AI servers, has reduced PUE to below 1.1 with its liquid cooling technology. It is expected to receive 50% of Alibaba’s new cabinet orders, with a 200% increase in AI server shipments in 2024. Inspur (300308) is Alibaba’s main supplier of 800G optical modules, with 1.6T products under verification, supporting high-speed interconnection in data centers. The market share of 800G optical modules is the highest globally, expected to increase to 35% by 2025. Hangang Co. (600126) provides 30% of the inference computing power for Alibaba’s Tongyi large model, with a 15 billion yuan order in Q1 2025. The local IDC resource advantages in Zhejiang are significant, planning a computing power scale of 10,000P.

04 Liquid Cooling Technology: Key Support for High-Density Computing Power

As the density of AI computing power increases, liquid cooling technology has become a critical component, with several companies laying out in this field. Inspur (002837) provides Alibaba with a 50kW+ high-power liquid cooling solution, holding the industry’s highest market share. Alibaba’s procurement accounts for over 60%, with power density per cabinet increasing threefold and energy consumption reduced by 40%. GaoLan Co. (300499) focuses on liquid cooling solutions for data centers, benefiting from the energy efficiency upgrade demand driven by Alibaba’s chips. The immersion liquid cooling solution has been certified by Alibaba, with a 150% increase in orders expected in 2024. Yimikang (300249) is Alibaba Cloud’s exclusive supplier of precision air conditioning, with its liquid cooling solution receiving green certification. In Q1 2025, net profit grew by 34.77%, winning multiple data center projects from Alibaba. BoHui Co. (300839) enters Alibaba’s ecosystem through its subsidiary Wuxi Extreme Liquid Cooling Technology, reusing its existing chemical foundation to apply cooling liquid synthesis technology to the liquid cooling field, achieving material self-supply and cost reduction.

05 Applications and Ecosystem Cooperation: The Last Mile of Industry Implementation

In the field of applications and ecosystem cooperation, many companies are deeply collaborating with Alibaba to promote the implementation of chip technology in various scenarios. Hengsheng Electronics (600570) collaborates with Alibaba Cloud to build financial AI solutions covering intelligent investment advisory and risk control, with Ant Group holding 20.79% of shares. Quantitative trading solutions based on Alibaba’s chips have been implemented in multiple brokerage firms. Qianfang Technology (002373) cooperates with Alibaba Cloud on “City Brain 2.0”, winning over 800 million yuan in Alibaba ecosystem projects in H1 2025. Intelligent traffic chips are developed based on Xuantie processors, deployed in over 100 cities. Runhe Software (300339) develops edge computing modules based on Xuantie processors, with Cainiao Logistics holding over 30% market share. The HiHope chip platform supports multiple Xuantie processors, with related revenue expected to grow by 80% in 2024. Allwinner Technology (300458) is a leading company in the RISC-V chip field, jointly developing SoC chips with Tsinghua Unigroup, with multiple RISC-V chips already in mass production. As one of the first “Xuantie Preferred Partners”, the company launched the world’s first mass-produced application processor equipped with the Xuantie 906 RISC-V.

06 Investment Perspective: Core Logic and Risk Alerts

From an investment perspective, Alibaba’s chip concept stocks cover the entire industry chain from design, manufacturing to application. Cambricon and Hygon Information have first-mover advantages in the AI chip substitution field; Data Harbor and Inspur Information are most closely tied to Alibaba in the computing power infrastructure field; Inspur and GaoLan Co. benefit from the explosive demand for high-density computing power in the liquid cooling technology field. It is important to note that this field has risks such as rapid technological iteration, strong policy dependence, and uncertainty in performance realization. Some concept stocks have seen significant increases in the past, which may pose a risk of overvaluation. Investors should focus on companies that have secured clear orders, possess strong technical capabilities, and have deep cooperation with Alibaba. It is recommended to closely monitor Alibaba Cloud’s quarterly financial reports for capital expenditure guidance, Tsinghua Unigroup’s chip mass production progress, and the specific order landing situations of various companies, as these will be key indicators to validate investment logic. With the mass production of Alibaba’s chips, the domestic computing power industry chain is expected to welcome a new round of growth opportunities. Alibaba’s planned investment of 380 billion yuan over the next three years will drive the development of the entire chain from chip manufacturing to computing power infrastructure. Domestic AI computing power is transitioning from “usable” to “easy to use”. In this technological transformation, companies that are deeply bound to Alibaba’s ecosystem and possess strong technical capabilities are expected to gain greater growth potential. As AI application scenarios continue to expand, the synergistic effects of the domestic computing power industry chain will become more pronounced.