Alibaba plans IPO for chip-arm T-Head to help bankroll ambitious AI infrastructure investments — company to go up against Cambricon and Huawei to capture domestic accelerator market

Chinese retail giant Alibaba is planning an initial public offering (IPO) for its chip manufacturing business, T-Head, as reported by Bloomberg. The move will initially give employees partial control of the business, although the timing of the IPO has yet to be revealed. When it happens, though, it will generate capital for Alibaba that it will be able to use to further invest in T-Head’s production and design hardware. With Alibaba having previously pledged more than $53 billion on AI infrastructure and development over the next few years, it will need serious capital to meet its aims.

It’s not clear at this time how much of a valuation T-Head would reach, but it is one of a handful of companies in China looking to develop AI inferencing hardware to help rival international companies like Nvidia. Although Chinese firms aren’t likely to be able to develop the chips necessary to handle AI training, inferencing hardware is certainly possible. Alongside Cambricon and Moore Threads, T-Head has the potential to become one of the major AI hardware suppliers in China.

With its own major cloud services and AI ambitions, Alibaba is looking to position itself as one of the key players in the space that China has pledged to invest 10s of billions of dollars over the coming years.

China’s Amazon

The parallels between Alibaba and major Western technology and retail companies are stark. Like Amazon, Alibaba is one of the world’s largest retail firms for both direct-to-consumer sales and business-to-business transactions. For over 16 years, it has run a highly successful cloud computing business, too, offering e-commerce management, data processing, and data mining services.

Like Amazon’s more recent endeavours to develop its own chips and hardware, Alibaba has been at it for several years too. It announced its first AI accelerators in 2019 and subsequently provided rentable access via cloud platforms.

In a post-ChatGPT world, both companies have also developed their own AI services, which they offer through their cloud platforms. Amazon has also invested in other AI firms like Anthropic and potentially OpenAI. Alibaba is going after the consumer space in a slightly different way, though, pushing its Qwen AI in its main mobile app in November last year, with plans to turn it into a personal assistant that anyone can access. It most recently tied in its online shopping and travel services with Qwen, expanding its capabilities.

It plans to turn that into a one-stop app for AI services and features, and with its T-Head IPO, it’s looking to build out the hardware development arm of its business to take the lead in domestic AI accelerator manufacturing, too.

Powering the third wheel

T-Head Semiconductor was founded by Alibaba in 2018 and traditionally develops RISC-V-based CPUs and integrated circuits for enterprise SSDs. However, it has also developed AI hardware and accelerated that in 2025 with a new range of AI accelerators, which some Chinese media sources claimed were able to compete with Nvidia’s H20.

Although those claims have yet to be tested, T-Head is making a name for itself in the chip design space and is competing in a huge market served by very few players. It falls far behind industry leaders like Huawei and Cambricon in terms of its capabilities and market reach, but with Alibaba’s financial backing, its manoeuvred into a position as a third option for Chinese companies looking to adopt AI technology without falling foul of government mandates to use primarily domestic chips.

Bloomberg highlights how T-Head has been aggressively recruiting visual AI and chip-making experts of late, and it’s just signed a deal with China’s number two wireless carrier to use its Pingtouge AI accelerators. Those chips will be used alongside those from other Chinese AI chip developers, MetX Integrated Circuits and Biren Technology, showcasing that there is serious competition within this burgeoning industry. And why not, with so much potential money on the table?

Hoping for history to repeat

After Alibaba completes its restructuring to provide employees with partial ownership and then moves to an IPO for T-Head, it will be hoping for a successful repeat of what happened with fellow tech companies working on IPOs in recent months.

Chinese GPU manufacturer, Moore Threads, often called “China’s Nvidia,” completed its long-awaited IPO in December 2025, after a mere five years in operation, and secured a valuation as high as $40 billion, raising more than $1.1 billion in capital from share sales.

This is occurring while the Chinese market is seemingly consolidating around major chip players. Fellow Chinese retail giant, Baidu, is also hoping to complete a successful IPO in Hong Kong for its chip design company, Kunlunxin. It’s hired banks ahead of what it hopes will be upwards of $2 billion in investment for the company. Although no official announcement has been made yet, the IPO was confidently filed earlier this month.

If Alibaba can replicate this kind of success with an IPO for T-Head, it will secure strong funding to expand the company’s capabilities and allow it to compete more favorably with Chinese industry giants like Huawei and Cambricon, even if it may remain a smaller player for some time to come.