Alibaba is developing an AI inferencing chip, designed to be more versatile than previous semiconductors released by the company.

According to a report from the Wall Street Journal, the chip has been manufactured by a Chinese company and is now in testing.

A previous AI processor developed by the company was manufactured by TSMC but the US government has since blocked the Taiwanese chipmaker from fabricating lead-edge chips for Chinese companies.

That chip, dubbed the Hanguang 800, is also a inferencing chip, and was released by the company in 2019. It was developed by the company’s research unit Pintouge, also known as T-Head. At the time of its launch, it was reported that the unit was also developing several other processors for Alibaba's internal and cloud use.

Like many Chinese technology companies, Alibaba has long been a major Nvidia customer, with reports claiming that alongside Baidu, ByteDance, and Tencent, the four companies were planning to spend $4 billion on Nvidia GPUs in 2024 alone.

However, as successive US presidential administrations have sought to increasingly restrict China’s access to advanced semiconductors, companies in the region have had to rely on homegrown hardware or deploy scaled-back processors developed specifically for the Chinese market, such as Nvidia’s H20, a less sophisticated version of its H100 GPU.

This became increasingly difficult after the US government imposed additional restrictions on exports of Nvidia’s H20 chips to China in April 2025. While the Trump administration has since reversed this decision, Nvidia revealed in its most recent quarterly filings that it did not sell any H20 chips to Chinese customers in Q2 2026, and its Q3 forecast also assumes no H20 shipments during the quarter.

Despite the development of its new chip, CNBC reported that Alibaba will continue to use chips from Nvidia and other vendors.