Alibaba Lands China Unicom as AI Chip Customer, Boosting Its Semiconductor Push

Alibaba Group Holding has won a major client for its AI chips, signing a deal with China Unicom that signals growing momentum for the e-commerce giant’s semiconductor ambitions.

According to a Sept 16 broadcast by state-owned CCTV, China’s No. 2 wireless carrier will deploy Alibaba’s Pingtouge, or “T-Head,” AI accelerators in a new data centre in northwestern China. The facility will also use chips from MetaX and Biren Technology.

The news fueled a surge in Alibaba’s stock, which jumped 5.3% on Sept 17 to its highest level since 2021, as investors bet on China’s AI boom.

Building a Domestic Alternative

Alibaba’s foray into AI chips mirrors broader efforts by Chinese tech firms to develop in-house alternatives amid U.S. restrictions on advanced Nvidia semiconductors, widely seen as the global standard for training large AI models.

Baidu, for instance, announced in August that it had secured a 1 billion yuan contract to supply China Mobile—Unicom’s larger rival—with servers powered by its Kunlun chips.

While the scale of Alibaba’s deployment at Unicom remains unclear, CCTV’s report highlights rising adoption of its T-Head products, which aim to rival Huawei’s Ascend line and chips from Cambricon. Alibaba is investing heavily, earmarking 380 billion yuan (S$68.4 billion) over three years for AI infrastructure to reduce reliance on Nvidia’s technology.

A Comeback Fueled by AI

The deal comes as Alibaba seeks to reassert itself in the post-DeepSeek era, amid renewed involvement from co-founder Jack Ma. The company has stepped up its AI push, unveiling multiple platforms, including its open-source Tongyi Deep Research model, to compete with global leaders like OpenAI.

Goldman Sachs recently raised its price target for Alibaba, citing strong performance in its cloud division—a bright spot in recent earnings.

Outperforming Rivals?

CCTV reported that Unicom praised Alibaba’s chip for outperforming Huawei’s Ascend 910B in memory specs, though Huawei is already promoting a next-generation 910C. In August, the Wall Street Journal revealed that Alibaba had developed an AI chip capable of powering services like DeepSeek’s R1 and its own Qwen models.

CCTV footage also showed server racks bearing the logos of Alibaba Cloud, China Unicom, and the Chinese Academy of Sciences, underscoring the growing ecosystem around homegrown AI infrastructure.

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🔥 Alibaba Secures China Unicom as AI Chip Customer, Shares Rally Amid Domestic Chip Race

HK:09988.HK:Alibaba Group
China’s Alibaba Group signed a deal with China Unicom to deploy its Pingtouge “T-Head” AI chips in a new northwestern data centre, alongside MetaX and Biren Technology chips, CCTV reported. Alibaba’s shares surged 5.3% on Sept 17 to their highest since 2021, joining a wider AI-driven rally.

US:NVDA:Nvidia
Alibaba’s chip effort mirrors similar moves by Chinese peers as U.S. restrictions block access to Nvidia’s advanced AI accelerators, considered the global benchmark for training cutting-edge models.

HK:09888.HK:Baidu
In August, Baidu won a 1 billion yuan contract to supply servers powered by its Kunlun chips to China Mobile, Unicom’s larger rival.

Private:Huawei Technologies / HK:688256.HK:Cambricon Technologies
Alibaba’s T-Head chips aim to compete with Huawei’s Ascend series and Cambricon’s designs. CCTV noted Unicom claimed Alibaba’s chip outperformed Huawei’s Ascend 910B in memory specs, though Huawei is now promoting its 910C.

HK:09988.HK:Alibaba Group
Alibaba has committed 380 billion yuan (S$68.4B) over three years to AI infrastructure, part of efforts to reduce reliance on Nvidia. Its comeback coincides with co-founder Jack Ma’s growing involvement and the launch of its open-source Tongyi Deep Research model, adding to platforms competing globally with OpenAI and DeepSeek.

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Goldman Sachs raised its price target for Alibaba, citing strength in its cloud business, a key growth driver in recent quarterly results.

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