Alibaba's shares jump after it lands a major customer for its AI chips

Alibaba's share prices surged on Wednesday after reports emerged from Chinese state media indicating that the tech giant has secured a significant partnership for its AI chips. According to CCTV, China Unicom has chosen to implement Alibaba's AI accelerators, which are produced by its semiconductor division known as Pingtouge or T-Head. Although Alibaba does not directly sell chips, its cloud services allow companies to harness the computational capabilities derived from those semiconductors. A source familiar with the situation confirmed the details of the CCTV report to CNBC, although Alibaba had not responded to inquiries at the time. As a result of the news, Alibaba's shares soared more than 5% in Hong Kong, while its U.S. shares rose over 2% in premarket trading. The partnership with China Unicom, the second-largest telecom operator in the country, will see Alibaba's computing technology integrated into a large-scale data center project that will also utilize chips from other local firms like MetaX and Biren Technology. This strategic move highlights China's ongoing commitment to enhancing the use of domestic semiconductors for AI, especially in light of the ongoing uncertainties regarding Nvidia's access to the Chinese market. On the same day, the Financial Times reported that the Cyberspace Administration of China instructed companies to cease purchasing certain Nvidia AI chips, leading to a nearly 1% drop in Nvidia's premarket shares. Alibaba stands as a pivotal player in China's AI landscape, having developed a variety of AI models and maintaining a strong presence in cloud computing. Reports from last month also indicated that the company is in the process of creating a new AI chip. However, it's currently unclear whether the chips being utilized by China Unicom are Alibaba's latest offerings. The announcement of this partnership surfaced after CCTV showcased a billboard detailing the collaboration in a segment about the telecom company’s new Sanjiangyuan data center in Qinghai province.