Alibaba announces latest AI chip as China steps up push to dethrone Nvidia

Alibaba (HKG: 9988) has announced its latest AI chip Wednesday, stepping up China’s push to develop homegrown alternatives to dethrone Nvidia (NASDAQ: NVDA). This happened as Nvidia gaming chips, especially designed for the Chinese market, remain banned.

The company says that Zhenwu M890 is three times faster than the previous model. It is made for the new category of AI agent software for complex tasks with multiple steps, performing without human direction.

The chip facilitates the memory required and communication demands of the AI agent while processing a huge amount of data, while simultaneously coordinating with different systems.

Two more chips are planned in the coming two years. V900 will be available in Q3 of 2027, while J900 will come in the same quarter of 2028.

At the Alibaba Cloud Summit, the company also presented the Panjiu AL128 server system, which holds 128 accelerators in one rack. Chinese business customers can access it right away through Bailian, Alibaba Cloud’s platform for domestic models.

T-Head has delivered more than 560,000 Zhenwu chips so far to over 400 customers, spanning 20 sectors, including car manufacturers and financial institutions.

Alibaba (HKG: 9988) additionally unveiled Qwen 3.7-Max, its newest large language model designed for advanced programming and extended agent operations. The model maintains performance for up to 35 hours of continuous operation.

Chip made for China now blocked by China

The ban on Nvidia’s RTX 5090D V2 graphics card was announced Friday, according to FT. The same day, Huang was present in the country along with Trump for the diplomatic talks.

The Nvidia chip ban adds another layer to the situation. Market sources told HKEPC that Chinese motherboard makers got notices from customs officials recently. The notices said the RTX 5090D V2 would not get approved for processing. Retailers trying to bring it into the country won’t get clearance or permission to sell it.

This is actually China doing the blocking, not the United States. In fact, the U.S. has been making it easier for some Chinese companies to buy certain Nvidia AI chips. Multiple AI companies can now order up to 75,000 units of chips like the H200.

Nvidia (NASDAQ: NVDA) created the RTX 5090D specifically for China last year, releasing it alongside the regular RTX 5090. But that first version got banned after the U.S. changed its rules. So Nvidia made a second version with even more limitations – the RTX 5090D V2.

The biggest change was cutting the memory from 32 gigabytes down to 24 gigabytes. The memory pathway also got narrower. This meant people who wanted to use the card’s 32 gigabytes for AI work couldn’t do it anymore.

Reports say many AI companies have been modifying RTX 5090D V2 cards to double their memory up to 48 gigabytes.

Since this chip was made only for the Chinese market, it has nowhere else to go. Some think the cards might get smuggled to other countries through unofficial dealers or sold directly to AI companies through back channels.

China’s biggest online seller, JD.com, recently had a special section for “AI GPUs” where it sold several Nvidia products that were supposed to be banned, including the RTX 5090D V2. The company took down that page after news outlets reported on it.

Nvidia is also struggling to please gamers

The situation makes things harder for Chinese gamers. They’ll now have to settle for the RTX 5080 as their best gaming option. China is putting more effort into homegrown chip companies to meet demand, but none of them match what Nvidia’s latest chips can do.

Meanwhile, prices for available Nvidia and AMD products keep going up.

Nvidia was also recently bashed for a new graphics system using AI to transform video games. The promise was cinematic quality of visuals as shown in the sample images, making old games like Resident Evil more detailed and realistically smooth. However, gamers thought it was overkill.

Alex Donaldson said on Bluesky that even though the environments get a massive glow-up, the characters looked uncanny and weird. He also said it is a compromise on artistic expression.

Jeff Talbot, a concept artist at Gunfire Games, posted: “This is NOT the direction games should be going in. Each DLSS 5 shot looked worse and had less character than the original.”

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