Alibaba Steps Up Its Semiconductor Game With New Cloud Processor

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Chinese tech giant Alibaba (BABA) has announced that it is coming up with a brand new server chip that will be used in the company's cloud-service business.

The move will not only put Alibaba in direct competition with the likes of Amazon, Huawei, and Microsoft, but also mend the relationship with the government which is concentrating on boosting the semiconductor business.

Alibaba's processor, the Yitian 710, is based on Arm Ltd's architecture and the chip will not be sold to any other buyer. Interested buyers will have to buy Alibaba's cloud computing solutions to use these processors. In 2019, Alibaba debuted in the semiconductor business with its Hunguang 800.

In recent years, many companies have raced to make their own chipsets for their cloud servers. Google uses Tensor, Amazon has its in-house Graviton processor to support the AWS and Huawei uses Kunpeng.

Alibaba is the biggest cloud service prouder in China and by market share, one of the top 5 around the globe.

Jeff Zhang, president of Alibaba Cloud Intelligence said, "Customizing our own server chips is consistent with our ongoing efforts toward boosting our computing capabilities with better performance and improved energy efficiency."

Alibaba announced its Xuantie series of IP cores back in 2019 for public use. These IP cores are based on RISC-V open-source architecture. Now, the company is planning to announce Paniju, its proprietary line of servers, that will make the source code for Xuantie.

This move is beneficial for the government as China has to depend on the west for most of the processors. When Huawei got its license to sell in the US revoked, it decided to improve its Kirin processors. Similarly, Baidu and Xiaomi have also started to venture into the semiconductor business.

However, the company is yet to announce when the processors will be available in the market. According to reports, the processors will be manufactured in ARM's facilities, but it is not yet known which site will be used for the production.

Alibaba, which is under investigation by the Chinese lawmakers for monopolizing business, was slapped with a $2.8 billion fine. If it enters the business that the government wants to promote so heavily, it will definitely work in favor of the company. Whether this lets Jack Ma's company create another monopoly, is the next question

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