[News] Alibaba Reportedly Unveils AI Chip Rivaling NVIDIA’s H20, Boosting Taiwan’s Server ODM Inventec

According to Economic Daily News, citing Wall Street Journal, sources say Alibaba has introduced a new AI chip that is more versatile than its predecessors, aiming to fill the gap left after NVIDIA faced regulatory hurdles in selling to China. The chip, currently in testing, is reportedly produced by a Chinese manufacturer rather than by TSMC, the report adds. As the report highlights, with Alibaba expanding its AI capacity, its main server supplier, Taiwan’s Inventec, is expected to benefit.

Economic Daily News highlights that Inventec has the closest ties to Alibaba. Institutional investors anticipate that as Alibaba rolls out its self-developed AI chips, it will accelerate AI server deployment and place more manufacturing orders, which in turn would benefit Inventec, as the report notes.

Inventec has been deeply engaged in China’s cloud market, supplying AI servers to the country’s four major cloud service giants—Baidu, Alibaba, Tencent, and ByteDance, as noted by the Economic Daily News. Its shipments to Chinese CSP customers are mainly in the form of L10 (rack assembly and testing) and L11 (server integration and rack deployment), as the report points out.

As Economic Daily News highlights, Inventec’s first-half shipments were mainly higher-priced racks (L10), while the second half will be dominated by motherboards (L6). The shift in product mix is expected to lift gross margins. Shipments in the second half will outpace the first, with full-year AI server shipments projected to see double-digit growth.

This optimism is supported by Alibaba’s cloud performance, with the firm recently reporting first-quarter cloud revenue of RMB 33.4 billion, up 26% year-on-year and above the 18% growth of the previous quarter. The company also said AI-related product revenue has maintained triple-digit annual growth for eight consecutive quarters, according to Economic Daily News.

Beyond Alibaba: China’s AI Chipmakers Accelerate Growth

China has been stepping up efforts to advance its domestic chip industry. Beyond Alibaba, Shanghai-based MetaX in July unveiled a new processor positioned as an alternative to the H20. The chip features larger memory than the H20, though at the cost of higher power consumption. As Wall Street Journal notes, MetaX said it is now preparing the chip for mass production. Another potential NVIDIA challenger, Beijing-based AI chip designer Cambricon Technologies, posted a strong April–June quarter, reporting $247 million in revenue on the back of solid demand for its Siyuan 590 AI chip, according to Wall Street Journal.

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