Alibaba’s Breakthrough in Self-Developed AI Chips: Which Concept Stocks Will Benefit?

Alibaba’s new generation AI chip has made a breakthrough, with a three-year investment plan of 380 billion yuan igniting the industry chain, bringing new opportunities to the domestic computing power ecosystem.

On August 30, 2025, Alibaba announced a significant breakthrough in its self-developed next-generation AI chip. This chip is primarily aimed at AI inference tasks, compatible with the NVIDIA software ecosystem, and is entirely produced by domestic companies. At the same time, Alibaba announced that it will 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 Strategic Layout

Alibaba is advancing its chip strategy through its subsidiary T-Head Semiconductor, which is central to building the next generation of cloud computing and artificial intelligence infrastructure. Alibaba’s chip strategy revolves around three core areas: AI chip strategy, RISC-V ecosystem development, and full-stack technology layout. In terms of AI chips, Alibaba focuses on cloud-based AI training and inference chips, aiming to reduce dependence on NVIDIA GPUs. Its representative product, the Hanguang 800 series, outperforms GPUs by several times and is widely used in Alibaba Cloud data centers. The newly launched chip is primarily aimed at inference tasks, compatible with the NVIDIA ecosystem, and built using domestic foundry and packaging systems through the RISC-V open-source architecture. Alibaba has constructed a complete technology stack from chip design to computing power infrastructure, planning to invest 200 billion yuan over the next five years in the research and development of cloud operating systems, servers, and chips.

02 Chip Design and IP Licensing Companies

Cambricon (688256) is the core supplier of Alibaba Cloud’s AI inference chips, with its Siyuan 590 chip deeply adapted to Alibaba Cloud servers. In the second quarter of 2025, Cambricon received a 1 billion yuan order from Alibaba, becoming an important force in replacing NVIDIA with domestic AI chips. Hygon Information (688041) has its Shenxuan DCU series GPUs compatible with the CUDA ecosystem, with clear demand for replacing NVIDIA’s A100. The company is jointly developing the next generation of training cards with Alibaba, expecting a 287% increase in AI chip revenue in 2024. Chipone (688521) provides RISC-V GPU IP licensing to T-Head, covering smart home and automotive electronics. In Q1 2025, revenue grew by 69%, securing multiple project orders in the AIoT field from Alibaba’s ecosystem. Allwinner Technology (300458) is a leading company in the RISC-V chip field, collaborating with T-Head to develop SoC chips, with several 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 featuring the Xuantie 906 RISC-V.

03 Chip Manufacturing and Testing Companies

SMIC (688981), as the largest domestic wafer foundry, undertakes the mass production of Alibaba’s AI chips using 6nm technology, achieving commercial yield standards. It manufactures multiple IoT chips for T-Head, with a monthly production capacity exceeding 10,000 units. JCET (600584) is a global leader in the packaging and testing industry, serving as the exclusive packaging provider for Alibaba’s chips. Utilizing SiP/3D packaging technology, it has a monthly production capacity of over 5 million units, providing advanced packaging solutions for the Hanguang 800. Huahong (688347) focuses on mature processes (55nm+), leading in automotive-grade chips and AI server power module technology. Its 12-inch factory in Wuxi provides capacity assurance for T-Head, with a monthly production capacity of 80,000 units. Liangxin Chip (688135) is the core testing service provider for Alibaba’s Xuantie chips, offering testing solutions for AI chips and automotive chips. The testing yield remains above 99.95%, receiving certification from T-Head’s ecosystem.

04 Computing Power Infrastructure Companies

Data Harbor (603881) is a core supplier of customized IDC for Alibaba Cloud, undertaking over 20 data centers. Alibaba Cloud accounts for more than 80% of its revenue, and its liquid cooling technology reduces PUE to as low as 1.15, with an expected addition of over 5,000 cabinets by 2025. Inspur (000977), as the main supplier of AI servers for Alibaba, has reduced PUE to below 1.1 with its liquid cooling technology. It is expected to secure 50% of Alibaba’s new cabinet orders, with a projected 200% increase in AI server shipments in 2024. Inspur (300308) is the main supplier of 800G optical modules for Alibaba, with 1.6T products under validation, supporting high-speed interconnects 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, receiving a 15 billion yuan order in Q1 2025. The local IDC resource advantage in Zhejiang is significant, with a planned computing power scale of 10,000P.

05 Liquid Cooling Technology Companies

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 increased by three times 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. Its immersion liquid cooling solution has been certified by Alibaba, with a 150% increase in orders expected in 2024. Yimikang (300249) is the exclusive supplier of precision air conditioning for Alibaba Cloud, with its liquid cooling solution receiving green certification. In Q1 2025, net profit grew by 34.77%, winning multiple data center projects from Alibaba. Feirongda (300602) supplies liquid cooling modules in bulk to Alibaba’s data centers, covering both cold plate and immersion technology routes. The 3D-VC cooling module can reduce chip temperatures by 15-20°C, suitable for high-density AI servers.

06 Ecosystem and Application Companies

Runhe Software (300339) develops edge computing modules based on Xuantie processors, holding over 30% market share in Cainiao logistics. The HiHope chip platform supports multiple Xuantie processors, with related revenue expected to grow by 80% in 2024. Hengsheng Electronics (600570) collaborates with Alibaba Cloud to build financial AI solutions, with Ant Group holding 20.79% of its shares. Quantitative trading solutions based on Alibaba’s chips have been implemented in multiple brokerage firms. Qianfang Technology (002373) cooperates with Alibaba Cloud on the “City Brain 2.0” project, winning over 800 million yuan in Alibaba ecosystem projects in H1 2025. Smart traffic chips are developed based on Xuantie processors, deployed in over 100 cities. Xuanji Information (300324) is the exclusive agent for Alibaba’s Xuantie C930 chip, collaborating with T-Head to promote low-power IoT SoC platforms. Its agency business covers the entire country, with a technical support team of over 200 people.

07 Representative Transformation Enterprise: Bohui Co.

Bohui Co. (300839), originally a chemical company specializing in specialty oils, is strategically transforming into liquid cooling and computing power services by entering Alibaba’s ecosystem through its subsidiary Wuxi Extreme Liquid Cooling. The company established the Extreme Liquid Cooling subsidiary to develop liquid cooling systems for GPU servers and immersion cabinets, bringing in former Alibaba Cloud executives to optimize energy consumption, with PUE potentially reduced to below 1.15. Leveraging its existing chemical foundation, Bohui is reusing cooling liquid synthesis technology in the liquid cooling field to achieve cost reduction through self-supply of materials. The company invested 390 million yuan to procure GPU servers from DingTalk service provider Xinfengwei, building a computing power pool of 200-300P. Bohui is participating in Alibaba Cloud’s UAE data center project, exploring the co-construction of a data center in the Middle East, benefiting from tax incentives between China and the UAE. However, its liquid cooling business is still in the investment phase, and the efficiency and cost control of cooling need to be verified, with profits highly dependent on the mass production progress of Alibaba’s chips. As Alibaba’s chip mass production takes shape, Cambricon and Hygon Information have a first-mover advantage in the AI chip replacement field; Data Harbor and Inspur are most deeply bound 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. This chip breakthrough battle for Alibaba not only concerns one company but also affects the entire domestic computing power industry chain. The investment of 380 billion yuan over the next three years will gradually penetrate every link, including chip design, manufacturing, testing, servers, data centers, and liquid cooling technology. Investors should focus on companies that have secured clear orders, possess strong technical capabilities, and have deep cooperation with Alibaba, while closely monitoring Alibaba Cloud’s quarterly financial reports for capital expenditure guidance and T-Head’s chip mass production progress.