Alibaba’s Tech Revolution: from E-Commerce to Chip Provider

21/08/2019

Alibaba now targets the chip industry by launching its first processor and thus breaking China’s long-lasted dependence from foreign core technologies. But it is not the first time the e-commerce giant leads the country’s hi-tech development

 

When it comes to developing new technologies, Jack Ma never sleeps. In the run for technological independence, Alibaba is one of the Dragon best friends, for sure. And if chips are the Achilles’ heel of the Made in China 2025 plan, the e-commerce giant is working on filling the gap.

Indeed, Alibaba has just launched its first processor, the XuanTie 910, thus starting the migration towards Chinese technological self-sufficiency in the semiconductor field. Alibaba’s chip subsidiary specialized in semiconductors, Pingtouge, released the new processor at the end of July, a move that accelerates Chinese industrial and technological independence amid the US-China trade war.

According to a press release, this processor built on the RISC-V structure can be used in applications for sectors including 5G, artificial intelligence (AI), and autonomous driving. Pingtouge also stated that the new processor could lower the costs of related chip production by more than 50%.

China’s XuanTie 910 is, therefore, likely to be available for commercial sale soon and the expectations are very high as the company claims that it is currently “the most high-performance RISC-V processor in the market.”

 

from e-commerce to chip provider - pingtouge - cifnews

© Pexels. Alibaba’s Pingtouge launches own processor, aiming to be a chip infrastructure provider for AI and IoT.

 

Alibaba formed chip subsidiary Pingtouge to develop AI chips and core processors in September 2018, amid Beijing’s appeal to develop homegrown core technologies. Pingtouge Semiconductor Co. Ltd would have been a vehicle for core processor IP licensor C-Sky Microsystems, a chip manufacturer based in Hangzhou, which Alibaba acquired in a bid to increase its own chip-making capability in April 2018.

According to Qi Xiaoning, vice president of Alibaba Group, Pingtouge aims to become an affordable chip infrastructure provider for the AI and Internet of Things (IoT) sectors.

Technically, the 16-core processor is built on the RISC-V structure, a free and open hardware instruction set architecture (ISA). This means that the ISA used for the construction of the processor is open source, therefore, not covered by US export restrictions. Therefore, Chinese companies like Huawei are able to use it without violating any US regulations.

A spokesman for Alibaba explains that the company will not make the physical chip, but it will issue a license to the developers for their prototype. “We are convinced that we need to distribute more technology to manufacturers to create more powerful chips,” says the spokesman.

 

“Chinese companies that rely on RISC-V don’t have to rely on a supplier like Arm or Intel,” therefore, “there’s no threat ever of them losing access to a key part of this design,” said Stewart Randall, who tracks China’s semiconductor industry at Shanghai-based consultancy Intralink.

 

Being an open-source standard recognized on a global level, the RISC-V ISA does not only avoid the reliability issues caused by the Chinese origins of Alibaba and Pingtouge but its use is also more convenient for Pingtouge, avoiding the cost for the license of expensive ARM cores.

Until now, the People’s Republic was completely dependent from foreign chips and it is, therefore, trying to build its own domestic industry, involving local tech giants such as Baidu, Alibaba, and Tencent.

Within the trade war between the US and China, Washington has often warned American chip makers not to sell chips to the Dragon’s tech companies. The British company ARM was even forced to break ties with Huawei following US sanctions, as the company uses American technology in its products.

“Chinese tech firms have already experienced considerable difficulties when cut off from access to chips or other high-tech components from abroad, as US trade measures against companies like ZTE and Huawei recently illustrated,” describe two Merics authors, Max J. Zenglein and Anna Holzmann, on their last paper on China.

 

from e-commerce to chip provider - drinks plant - cifnews

© 123.rf. Drinks production plant in China. According to Chinese leadership, new technologies will be a key cog in Made in China 2025.

 

Before the launch of the XuanTie 910 processor, the US cut on semiconductors supplies represented a big obstacle for China’s race to global technology leadership. Although the Middle Kingdom leads innovation in new technologies such as AI, 5G, facial recognition, and autonomous driving, it still needs supplies in core technologies.

This is the reason why the Made in China 2025 plan sets, among other objectives, to produce at home 80% of the technological components the industry needs like semiconductors, thus drastically reducing the dependence on suppliers abroad. As a result, Chinese major tech companies have now entered the chip industry and the launch of the XuanTie 910 by China’s largest e-commerce giant is a clear signal.

But Alibaba is not new to investments in advanced technologies. In particular, as China’s largest R&D spender, the e-commerce company has invested in seven research labs that focus on artificial intelligence, machine learning, network security, natural language processing, and more.

 

Alibaba is now part of a group of Chinese tech companies, including Huawei and AI upstart Horizon Robotics, that are dedicating resources to develop their own AI chips.

 

Just last winter, AI technology was fundamental in the success of the Alibaba’s Single Day, whose logistics company Cainiao Network used robots with automated driving to process its orders. Thanks to advanced technologies such as IoT applications, big data, edge computing, AI, and automated guided vehicles (AGVs) Cainiao managed to process 1 billion orders in 24 hours for the first time.

The Hangzhou-headquartered company also rolled out a chain of diners staffed by robotic waiters within its Hema supermarkets, which also leverage automation in the business concept. Today, Chinese customers can leverage Alibaba’s new technologies in over 100 Hema supermarkets in 16 cities including Beijing and Shanghai.

However, one of the latest successful experiments in the hi-tech field of AI is certainly the construction of the first automated hotel in China, in Hangzhou. The FlyZoo Hotel hosts a robotic intelligence called Space Egg, which combines AGV technology with communication and facial recognition abilities.

Moreover, Alibaba is also the largest single investor in SenseTime, an AI startup known for its facial-recognition technology, that is creating an AI research center even in the United Arab Emirates. The lab hopes to “advance the frontier of AI” by supporting other startups as they commercialize their AI tech and develop ideas and products.

 

from e-commerce to chip provider - cainiao - cifnews

© Alizila.com. AI technology was fundamental in the success of the Single Day, whose logistics company Cainiao used AGVs to process 1bn orders.

 

It is easy to notice how Alibaba’s investments in AI are largely contributing to the development of new technologies in China and the realization of the country’s ten-year master plan. But for what concerns the chip industry, the Hangzhou company is not alone. Even Tencent entered the microprocessor market, following the US ban against ZTE. Last December it invested $50 million in Enflame, a Chinese chip-making startup.

In July, a few days before the Xuantie 910 presentation, Xiaomi, instead, bought 6% of Verisilicon holding company, a Chinese chip developer, which makes it the second-largest external shareholder after the China National Integrated Circuit Industry Investment Fund.

Since the US government has blacklisted Huawei, preventing American companies from selling to the Chinese giants all the components containing certain technology, this new development of Chinese companies in the field of microprocessors could define a turning point for the forces involved in the technological field.

It is early to define whether Beijing will excel in chip technology or not, but it is catching up fast. In the meantime, Alibaba is demonstrating once again to be at the forefront of ensuring the achievement of the Made in China 2025 plan’s goals.

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