Chinese e-commerce giant Alibaba Group Holding BABA on Tuesday confirmed plans to develop an in-house processor that would be used to power its cloud computing business.
What Happened: The Yitian 710 server chip is developed by Alibaba’s in-house semiconductor unit T-Head.
The design is based on British chipmaker Arm Holding's architecture and will use the 5nm technology, which has been under development since 2019 and is expected to boost Alibaba’s cloud services by leveraging performance and energy efficiency.
Why It Matters: The semiconductor foray replicates similar moves from rival computing players such as Huawei Technologies and Amazon.com Inc AMZN.
Alibaba was the top cloud vendor in China in the second quarter and its share of the Chinese cloud market stood at 33.8%, according to a report released by Canalys.
The Chinese government has also been urging industry leaders to invest in the domestic chip sector amid crippling worldwide shortages affecting industries ranging from cars, electronics applications, to smartphones.
Price Action: Alibaba shares closed 0.68% lower at $166.82 a share on Monday.
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Photo: Courtesy of Alibaba
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