Alibaba Cloud is pushing to accelerate its planned data center in Shanghai.

The Chinese cloud computing company posted on its WeChat account that it has signed an agreement with the Jinshan District People's Government of Shanghai for the construction of a data center in the city that will house Alibaba's custom chips.

Part of the "Aspara Cloud Intelligent East China Computing Center," Alibaba claims the new data center will be one of the largest "intelligent computing hubs" in East China, and will be based on its in-house Zhenwu AI chips, developed by its T-Head.

Alibaba's latest AI chip is the Zhenwu 810E chip. The chip has 96GB of HBM2e memory, offers 700Gbps of inter-chip bandwidth, and is built on T-Head’s self-developed computing architecture and proprietary ICN (Inter-Chip Network) interconnect. It is designed for AI training and inference workloads, and runs on a fully in-house software stack.

Alibaba and the Jinshan district have long worked together, previously launching the computing center in 2021 with an investment of 40 billion yuan ($5.8bn).

The new agreement will see Alibaba Cloud build a compute facility focused on establishing a "benchmark for green computing power centers by building a full-stack independent computing power foundation from underlying chips and intelligent computing platforms to upper-layer applications."

The company also states that the development will enable Jinshan District to build an "all-time, all-area AI city," with Alibaba assisting with the digital transformation of government services and urban governance in the district and providing IT infrastructure to the public sector.

Alibaba Cloud also has existing "intelligent computing hubs" in Zhangbei and Ulanqab, which it says combine to create a country-wide network.

The Chinese cloud provider currently operates more than 94 availability zones in 29 regions. Earlier this year, the company said it was exploring increasing its capex investment in AI infrastructure to $69.05bn (480 billion yuan) over the next three years, up from the previously promised $52.4 billion (380 billion yuan), as stated by the company in early 2025.

In China, a recent report from Omdia said that Alibaba holds more than a third of the local AI cloud market. As reported by SCMP, Alibaba Cloud held a 35.8 percent market share. In second place was ByteDance's Volcano Engine with just 14.8 percent.

However, of the Chinese providers controlling the full chip-to-cloud value chain, Huawei and Baidu topped the charts as per a different report from Frost & Sullivan.