Alibaba eyes chip unit IPO amid Nvidia competition

Alibaba is reportedly getting ready to launch an initial public offering (IPO) for its chipmaking division called T-Head.

Alibaba is attempting to take advantage of the overwhelming investor demand for artificial intelligence hardware. It plans to make T-Head a competitor to Nvidia Corp. in the global and domestic AI accelerator markets.

Alibaba plans chipmaking business IPO to challenge Nvidia

Alibaba Group Holding Ltd. is reportedly planning to list its chipmaking department, T-Head, as an independent company partly owned by its own employees. 

The first phase of this plan involves a structural reorganization to align the interests of key engineers and executives with the company’s future stock performance. Once the restructuring is complete, the group will explore an initial public offering. 

T-Head, also known as Pingtouge, is a critical part of Alibaba’s “AI + Cloud” strategy. For years, the unit functioned primarily as an internal R&D department and designed custom silicon to improve the efficiency of Alibaba’s massive data centers. 

But, with China now having its access to the world’s most advanced AI chips, specifically those from Nvidia, restricted, Alibaba has transformed T-Head into a commercial provider of domestic hardware alternatives.

Investors are currently hungry for “Nvidia alternatives,” but Nvidia is still the global leader with a market capitalization hovering around $4.5 trillion. 

The Cyberspace Administration of China (CAC) recently advised major domestic firms to stop purchasing certain Nvidia models, such as the RTX Pro 6000D, due to security and supply concerns. 

The complications between Nvidia and China have created a “vacuum” in the market that companies like Alibaba, Huawei and Baidu are racing to fill.

Why is Alibaba choosing to list its chip unit now?

The Hong Kong stock market is currently experiencing a record-breaking surge in tech listings. In the first two weeks of January 2026 alone, IPOs in the region raised over $4.3 billion. This “January boom” is due to Chinese AI and semiconductor firms seeking capital to fuel the country’s technological self-reliance. 

AI startups like MiniMax and its rival Zhipu AI both saw significant investor interest during their recent market debuts.

Earlier this month, Alibaba served as an investor for Montage Technology’s $900 million Hong Kong listing. Montage designs high-speed data flow chips for AI accelerators. Following the investment, the company saw its valuation climb toward $22 billion. 

T-Head’s newest flagship product, the T-Head Parallel Processing Unit (PPU), is designed specifically for high-volume AI inference tasks. Reports indicate that the PPU is engineered to compete directly with Nvidia’s H20, which is the most powerful chip Nvidia is currently permitted to sell in China. 

The T-Head PPU features 96 GB of high-bandwidth memory (HBM2e), matching the capacity of the H20. Most importantly, production of the PPU costs about 40% less than its Nvidia equivalent. As a result, Alibaba Cloud can afford to slash its public cloud inference prices by up to 50%, making AI more accessible to smaller Chinese enterprises.

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