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| Alibaba is trying to boost its cloud business |
Chinese e-commerce giant Alibaba has launched a new server chip to boost its cloud computing business and compete with US competitors such as Amazon.
The chip called Yitian 710 is said to be on a new server called Panjiu. Chipsets and servers are not sold directly to customers.
Instead, the company's cloud computing customers buy services based on the latest technology. These servers are designed for AI and storage applications.
The company did not specify when to provide services to its customers based on the latest chipsets and servers. Alibaba doesn't make semiconductors, it designs them.
This is the trend among Chinese companies. Huawei has developed its own smartphone chips, and Baidu raised money for its independent semiconductor company this year.
Cloud computing competitors in the US including Google and Amazon have done the same.
Alibaba sees cloud computing as an important part of its future growth. But it currently accounts for 8% of the company's total sales.
After the e-commerce giant's cloud computing company lost a major account using its offshore cloud services, its cloud computing business slowed in the June quarter.
However, Alibaba is the largest cloud computing company in China. But competitors are investing heavily to catch up.
As US sanctions continue to hurt Huawei's smartphone business, the company is also planning to increase sales in the cloud.
Alibaba is trying to expand its cloud business internationally. But in terms of global market share, it still lags behind companies like Amazon and Microsoft.
The company is investing in its own chips to get custom chips that can run specific applications to differentiate itself from the competition.
Alibaba challenges Amazon and Microsoft
Adapting our server chips is in line with our ongoing efforts to improve our computing power through better performance and energy efficiency, the company said in a press release.
The Yitian 710 chip is based on British semiconductor company Arm's architecture and uses some of the latest manufacturing processes.
The Yitian 710 chip is not the company's first attempt to enter the custom semiconductor industry.
In 2019, Alibaba launched Hanguang 800, its first artificial intelligence chip.
When the new server chip hit the market, China's internet giants were under close scrutiny by local regulators, hoping to control some of their powers and tighten rules in areas such as antitrust data collection.
In April, the company was fined $2.8 billion in an antitrust investigation. However, when it comes to semiconductors, China hopes to improve its domestic capabilities because the country's industry is still highly dependent on foreign technology.