After launching its own chip, Alibaba buys Chinese AI chipmaker

After announcing its very own neural network chip, Alibaba has made another step towards strengthening its new AI chips business. The e-commerce giant announced on April 20th that it will fully acquire local chip designer C-SKY (中天微), according to QQ News.

“Acquiring C-SKY is an important step for Alibaba’s microchip layout,” said Alibaba’s CTO Jeff Zhang (Zhang Jianfeng). Zhang added that IP core is the heart of basic chip capability and that entering the field of IP core means realizing an “autonomous, controllable” foundation for China’s chips. In electronic design, an IP core refers to a chip layout design that is the intellectual property of one party.

Alibaba CTO Jeff Zhang (Image credit: Alibaba)

Hangzhou C-SKY Microsystems is an integrated circuit design house. The company has developed 7 types of CPUs covering applications including IoT, digital audio and video, information security, network and communications, industrial control and automotive electronics.

This is Alibaba’s first takeover in the chip business although the e-commerce giant has so far invested in several chip companies. On April 19, the company announced its own Ali-NPU chip which will provide services for businesses through the Ali Cloud.

News of Alibaba’s foray into chip design comes at a particularly turbulent time after US Department of Commerce put a seven-year ban on US companies selling components to Chinese state-owned ZTE. Network communications equipment manufacturer ZTE heavily relies on imports of US-made chips.

China has been lagging behind US chipmakers: in 2016, the country imported $230 billion worth of chips. However, thanks to its AI development plan and the “Made in China 2025” industrial upgrade plan, China has been slowly increasing its self-sufficiency in chip manufacturing. In 2014, the government set up a subsidy program called China’s National Integrated Circuits Industry Investment Fund which is aiming to raise at least RMB 150 billion for its second fund vehicle, according to Bloomberg.

The US has been wary of China acquiring chip technology. In September last year, President Trump’s administration blocked the sale of US-based Lattice Semiconductor to Canyon Bridge Capital Partners, backed by China Venture Capital Fund over national security concerns.

Questions have also arisen over the future of Alibaba’s cloud service Ali Cloud in the US. Certain commentators believe that the US will retaliate against Beijing’s requirement that foreign cloud-computing firms, such as Amazon and Microsoft, form joint operations with Chinese companies and license their technology.